Is it possible to raise money without a product but with letters of intent?

Letters of intents as in business owners stating that they'd use the product based of the pitch and some screen demos. Would it help to raise?

This question originally appeared on Quora, this is my response

Absolutely. It’s something I’ve done previously.

In fact, I’d highly recommend doing so before you spend resource to build your product. If you can’t get letters of intent then chances are it’s not compelling enough for customers to buy it, even if it is made. Rather than spend 6 months building your product only to find you don’t have product/market fit, you’d be better off learning that after 1 month of trying get letters of intent.

We’d certainly have saved a lot of time at my previous startup had we taken this approach.

If you want to go one step further you could even try and get customers to pre-pay for the product with some fringe perk for early support - say a lifetime discount.

Ultimately you’re unlikely raise any real institutional money without paying customers (what you will raise is angel money) so a complete product or letter of intent aren’t hugely different. In many cases, for a startup, a letter of intent is much closer to a paying customer than a ‘completed’ product since the first is (somewhat) market validated while the second is not.

Remember, most early stage companies fail due to a lack of product/market fit. If you have letters of intent then you’re that much closer. Good luck!

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