Data Privacy for Startups: What You Actually Need to Know

Privacy regulation is confusing. Most startups either ignore it (risky) or over-comply (expensive).

Here’s what you actually need to know.

What Laws Apply to You

Australian Privacy Act

Applies if: You’re an Australian business with annual revenue over $3 million, or handle health information.

Under $3M revenue: You’re technically exempt from most requirements. But still have obligations around health information and credit reporting.

Note: The threshold is being reviewed. May drop or disappear. Don’t build bad habits.

GDPR (Europe)

Applies if: You have customers in the EU, or process data of EU residents.

Having an EU customer makes you subject to GDPR. It doesn’t matter where you’re located.

Key requirements: Consent for data collection, right to access, right to deletion, data breach notification.

CCPA/CPRA (California)

Applies if: You have California customers and meet certain thresholds ($25M revenue or 100K consumers’ data).

Most Australian startups don’t meet the thresholds. But if you’re targeting US market, be aware.

Other Laws

Various US states are adding privacy laws. UK has its own GDPR variant. Asia has different rules.

Baseline: Follow GDPR-style practices. You’ll be compliant with most frameworks.

What You Actually Need to Do

Level 1: Basic Hygiene (Everyone)

Privacy Policy: Have one. Make it readable. Explain what you collect and why.

Data Minimization: Only collect what you need. Don’t hoard “just in case.”

Secure Storage: Encrypt data at rest and in transit. Use modern security practices.

Access Controls: Limit who can access personal data. Log access.

Cost: Near zero. Just requires attention.

Level 2: User Rights (If GDPR Applies)

Consent: Clear opt-in for marketing, cookies, data collection beyond essential.

Access Requests: Process to handle “what data do you have on me?” requests.

Deletion Requests: Process to delete user data on request.

Breach Notification: Plan to notify users within 72 hours if data is compromised.

Cost: Moderate. Some engineering work. Some process documentation.

Level 3: Compliance Programs (Larger Companies)

Data Protection Officer: Someone responsible for privacy.

Data Processing Agreements: Contracts with vendors handling your data.

Impact Assessments: Formal analysis of high-risk processing.

Regular Audits: Review compliance periodically.

Cost: Significant. Usually Series A+ concern.

GDPR requires consent before setting non-essential cookies.

Essential cookies: Login, shopping cart. No consent needed.

Analytics cookies: Google Analytics, etc. Need consent.

Marketing cookies: Facebook pixel, etc. Need consent.

Options:

  1. Cookie consent banner (annoying but compliant)
  2. Use privacy-friendly analytics like Plausible (no consent needed)
  3. No non-essential cookies at all

We chose option 2. Simpler, less annoying, still get useful data.

The Third-Party Question

You’re responsible for your vendors too.

If you use a CRM that mishandles data, that’s your problem.

For every vendor with access to personal data:

  • Review their privacy policy
  • Have a Data Processing Agreement (DPA)
  • Check they have reasonable security

Major vendors (Stripe, Intercom, etc.) have this sorted. Sketchy tools might not.

The AI Complication

AI tools often process your data. Privacy implications:

Training data: Is your customer data being used to train models? Check vendor policies.

Data residency: Where is data processed? EU customers might care.

Sub-processors: AI vendors use other services. The chain matters.

OpenAI and Anthropic have business plans that don’t use your data for training. Use those, not the free consumer versions.

Practical Implementation

The Privacy Policy Generator

Tools like Termly or iubenda generate privacy policies. Good enough to start.

Review with a lawyer before scaling. $500-1,000 for a proper review.

For cookie consent: Use a tool like Cookiebot or Osano.

For marketing consent: Build into your signup flow. Explicit checkbox. Not pre-checked.

The Data Map

Know what data you have and where it lives.

Simple spreadsheet:

  • Data type
  • Where stored
  • Retention period
  • Who has access
  • Legal basis

Update quarterly.

The Deletion Process

Build “delete user data” as a feature. You’ll need it.

Consider: Database records, backups, analytics data, third-party systems.

True deletion is harder than it seems. Plan for it.

The Enforcement Reality

Are privacy laws enforced against small companies?

GDPR: Yes, increasingly. Fines have hit small businesses.

Australian Privacy Act: Less aggressive but growing.

CCPA: Mostly targeting large companies so far.

The bigger risk isn’t regulators. It’s customers and partners asking about privacy. “We take privacy seriously” with no evidence doesn’t fly anymore.

The Quick Checklist

  • Privacy policy exists and is current
  • Only collecting necessary data
  • Data encrypted at rest and in transit
  • Access controls in place
  • Cookie consent if using analytics/marketing cookies
  • Vendor privacy review complete
  • User deletion process exists
  • Breach response plan documented

If you can check all boxes, you’re ahead of 90% of startups.

The Bottom Line

Privacy isn’t just compliance. It’s customer trust.

“We won’t abuse your data” is a competitive advantage when competitors are cavalier.

Do the basics. Document what you do. Improve as you grow.

Privacy isn’t that hard if you start early. It’s very hard if you retrofit.