Except the LOIs in this case are utterly meaningless. I've been on the customer side of LOIs that were signed on request, knowing that it obligated us to nothing.
Re:Sell your product with fake screenshots
by nobody_nowhere on Monday October 12, 2009 @09:30PM
(#878078)
They just mean you have a sales pipeline, nothing more.
Imagine you're an investor. Two guys with ideas of similar merit come in front of you. One has three signed (and admittedly meaningless) LOIs from potential customers and knows what to build. One has a prototype but is really unsure of the marketplace.
The investors I know pick the LOI guys every time, all other things being equal. It's the execution side of the "ideas vs execution" debate.
It's very easy to "convert" a prospect to an LOI, because it doesn't cost anything for the prospect to do so. Once so converted, you have license to go dark for many weeks to build a first cut product, and the LOI-bearers are all going to light right back up again when you reach out, because you secured an agreement that they would.
It's a pretty smart play.
1. You're not your customer/user
2. Identify the minimum viable product
3. Incur technical debt wisely
4. Get feedback early and often
Pursuing angel financing with those signed LOIs is a completely different ballgame from showing up with an idea, or even working code.