Common Cybersecurity Mistakes by Nepali Startups and How to Fix Them

04 Jan 2026

The startup ecosystem in Nepal is growing at a very fast rate due to the innovative web and mobile applications that are transforming the way businesses are conducted and people communicate. Startups based in Nepal have been developing an increasing number of fintech and e-commerce solutions, educational and health apps that are starting to target users nationally and internationally using digital solutions. Nevertheless, other cyber advances that come along with this digital expansion are a major challenge that requires web and app security.

Security is not a technical need only; it is an element of trust, credibility, and sustainability. 

Lack of proper security practices may cause data breaches, loss of money, reputation and even regulatory fines. In the case of startups that are usually resource-strained and have small teams, these risks are magnified, and hence the need to identify vulnerabilities early.

Through this guide, the founders, developers, and tech enthusiasts will have a clear insight into the potential threats and how to take proactive measures towards minimising risks as well as gaining user trust and business growth.

Background: Cybersecurity Landscape in Nepal

The digital economy in Nepal has been advancing at quite a high rate, with startups and business ventures implementing web and mobile-based solutions at a faster rate. In line with this increasing number, there are also cyber threats in the form of ransomware, phishing attacks, and DDoS attacks that are exposing companies more to risk, particularly startups. 

Nepali startups are also not able to completely secure their systems due to limited resources, the shortage of skilled employees, and the dynamic regulation within the context of the Individual Privacy Act 2018 and the National Cyber Security Policy 2023. 

Financial cybercrimes, supply chain attacks, and sensitive data attacks are the typical examples, and small and medium enterprises (SMEs) are especially susceptible.

Current Trends

In Nepal, cybersecurity incidents increased 340 per cent in 2025 as compared to 2024. 

Key observations include:

• The most frequently reported attacks are phishing (63%), which tend to involve putting the credentials and other sensitive financial information at risk.
• Banking and payment systems are victims of financial cybercrimes that constitute approximately 21% of the complaints.
• The most famous attacks involve disruptive attacks on government websites, ransomware attacks targeting companies in Kathmandu, and Sidewinder APT malware attacking the fake apps.
• Finance, telecom, and e-commerce are the most vulnerable industries, and API exploits, SQL injections, and hybrid cyber-physical attacks are the most common.

These trends indicate that the growth in the digital economy of Nepal is accompanied by heightened exposure to cyber risks.

Regulatory Context

There are several laws and policies covering cybersecurity in Nepal, and they include:

• Individual Privacy Act 2018 and Regulations 2020 - Consent must be given regarding the collection and protection of personal data against unauthorised access, but this is not enforced severely.
• Electronic Transactions Act 2008 - The Act gives legal backing to the use of electronic records and transactions.
• National Cyber Security Policy 2023 - Encourages a secure online landscape, data centre licensing, and the endorsement of such features as multi-factor authentication (MFA) and software patching.
• To continue being compliant with the NCSC advisory, startups should also adhere to the registration of the Companies Act, licensing of the IT department, and constant monitoring of various advisories. Nevertheless, these laws do not have powerful punishments and obligatory notifications of breaches, and expose the businesses partially.

Common Security Mistakes by Nepali Startups

The startup ecosystem in Nepal is developing at a very fast pace, and businesses are becoming even more dependent on web and mobile applications to contact their customers, simplify their operations and grow exponentially. Nevertheless, most startups commit serious security errors during the initiation and growth stages that expose their systems, data and users to risks. 

Some of the most frequent mistakes are the omission of multi-factor authentication (MFA), the use of weak passwords, the lack of software updates, the insufficient training of employees, and the improper setup of cloud systems. Such errors readily facilitate the theft of startups by phishing, ransomware, and other cyberattacks, which are on the rise in the digital economy that is rapidly growing in Nepal.

Although these problems are relevant, the majority of them can be addressed using simple and low-cost activities, depending on the resource constraints and operational conditions of startups.

Weak Passwords

Weak/reused passwords are still among the simplest methods for attackers to obtain unauthorised access to accounts and sensitive information. This is an issue that is common in Nepali startups because of:

• Poor knowledge of safe password use by staff.
• Avoiding password managers is thought to be complicated.
• Fast recruitment at the time of expansion without due onboarding.
• 

Example: In 2025, an e-commerce startup based in Kathmandu was attacked due to a credential-stuffing attack as a result of employees using weak passwords. This violated the data on the customers and resulted in the NPR 5 million fines and recovery costs.

How to Fix:

• Check online apps, such as Have I Been Pwned, to discover hacked accounts.
• Use powerful and distinct passwords on each account.
• Use a password manager to make it easier to store and share passwords.
• Periodically (quarterly or semi-annually), carry out password audits to ensure password hygiene within teams.

Bypassing Multi-Factor Authentication (MFA).

Many startups skip MFA due to:

• Perceived setup complexity
• Italopate lacks IT personnel to aid implementation.
• Pressure to be fast and launch products sooner rather than later.
• 

Examples: In Nepal, financial companies were ransacked and disrupted for several weeks in 2024, impacting their reputation. Absence of MFA in critical accounts of an administrator added to those occurrences.

How to Fix:

• Search all organisational accounts, such as Google Workspace, AWS, and internal administration panels, for the absence of MFA.
• Make MFA available everywhere, beginning with high-risk accounts, through applications such as Authy or Google Authenticator.
• Maximum protection should be implemented by combining MFA and strong password policies.
• Demonstrate effective employee direction about the establishment of MFA to promote compliance.

Unpatched Software

Older software, plug-ins, or legacy software is usually left unsecured, where start-ups attempt to reduce expenditure, or do not have dedicated IT personnel. Hackers are using these vulnerabilities to inject malware, carry out SQL injections or steal confidential information.

Example: In 2025, a Nepali booking site was the victim of an SQL injection attack that revealed 10000 user records that were sold on the dark web forums.

How to Fix:

Use vulnerability scanners such as Nessus, OpenVAS to identify old components.

Automate patching by using tools such as WP-CLI for WordPress or package managers for other platforms.

Keep track of updates through free dashboards or notifications so that you do not miss any updates.

Test in the staging environment prior to production implementation so that downtime is not experienced.

Poor Employee Training

Despite high technical security measures, employees are usually the weakest link in security. Poor awareness results in phishing clicks, unintended data exposure and malware infection.

Example: In 2025, Nepal-based retail chains indicated that a majority of cyber incidents were a result of employee fraud after succumbing to phishing emails (63%). The resultant malware infections resulted in a loss of between NPR 2-10 million as the operations were interrupted, breaking the business image.

How to Fix:

• Look at the incident logs to determine the general trends of social engineering attacks.
• Carry out monthly phishing drills with the aid of a free platform and app, such as KnowBe4 trials.
• Offer easy-to-understand policy manuals and frequent security awareness training.
• A culture of security should be encouraged where employees who report suspicious activity are rewarded.

Unprotected Cloud Configurations.

The most common misconfigured cloud services are AWS or shared hosting, where developers copy templates without audits or have no adequate knowledge of cloud security concepts. These improper settings may make databases, storage buckets, or sensitive services accessible to anyone.

Example: Kathmandu SaaS startup in 2025 leaked their database on the internet because of incorrect AWS setups. This was a breach that resulted in data stealing, investor withdrawal and destroyed brand image.

How to Fix:

• Text scan tools such as Scout Suite can be used to scan the cloud environment for misconfigurations.
• Enact minimum-authorisation controls based on IAM roles.
• Encrypt data at rest and in motion.
• Think about moving to a VPS based on Cloudflare WAF to make it more secure.
• Carry out periodical cloud security audits and detect and address gaps.

The Nepali startups need to have cybersecurity to secure data, gain trust, and expand safely. Startups can minimise risks by improving passwords, the lack of MFA, unpatched software, insufficient training of employees, and insecure cloud configurations.

To seek the service of a professional, Falcon Tech Nepal will provide safe software creation and continuous digital solutions to start-ups. Be more secure today, and be confident in building.

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