Letter of Intent

A non-binding written commitment from a customer, used as evidence of demand.

Also known as: letter of intent, LOI, intent letter

A letter of intent (LOI) is a customer’s written statement of intent to buy under stated conditions — non-binding, but signed, specific and dated. It sits between verbal interest and contracts on the evidence ladder: stronger than promises because reputations attach, weaker than cash because exit is free.

strong LOI:  named product + quantities + price bands + conditions + signature + date
weak LOI:    "we're excited about potentially exploring..." (politeness on letterhead)

Collect LOIs to unlock the next step: investor conviction pre-revenue, pilot approvals inside enterprises, team conviction to build. Then convert them — an LOI file that never becomes revenue was market research, honestly labeled.

The classic mistakes:

Counting LOIs as sales. Pipeline reports full of letters that never convert mislead everyone including yourselves. Track LOI-to-contract conversion separately and discount accordingly.
Vague letters accepted gladly. Non-specific LOIs cost signers nothing and prove nothing. Push (politely) for quantities, timelines and conditions — resistance is itself data.
LOIs instead of pilots. A letter is cheaper than a trial for both sides, which is exactly its weakness. Where possible, convert LOI energy into paid pilots that test reality.
Legal weight misunderstood. “Non-binding” still creates expectations and, in some jurisdictions, pre-contractual duties. Keep language clearly non-binding unless counsel advises otherwise — and never present LOIs to investors as contracts.

Use them as: evidence for building and raising, and as forcing functions for specificity — drafting the LOI surfaces every vagueness in the deal before lawyers bill to find it (see MSA for what follows).