Non-binding LOIs effectively filter casual interest from serious customer demand
Jared Friedman · Jared Friedman - Advice for Hard-tech and Biotech Founders · Y Combinator · Sep 20, 2019 · at 13:50
YC Partner Jared Friedman explains how hard-tech founders can prove demand to investors when direct pre-sales are not feasible.
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“Because it's not binding, it doesn't actually commit the customer to buying, but because it looks like a contract, customers take it really seriously. It's easy when you're talking to a customer for them to, like, be polite and casually say, like, sure, I'd buy your thing if it ever worked someday, because it's, like, no commitment for them, but if you ask them to sign an LOI, you'll find out if they're actually really serious about buying your product, and investors know that.”
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