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Letter of understanding for startups: Template

Recently in our weekly user interviews at Lightmeter we’ve heard enthusiastic phrases like “I need this now”, and “I’m ready to buy already”. Lucky us (it took weeks to get here)!

One way of turning such positive sentiment into a concrete and quantifiable resource is to whip out a Letter of Understanding, sometimes also referred to as a Memorandum of Understanding, and ask the other party to sign on the line.

Filling in form fields by way of signature, to avoid the delays of printing

Letters of Understanding are a simple, human readable way to communicate an intention to use / buy / integrate / etc. your product or service, without the need for lawyers, or the threat of legal liability. That’s because such letters are not legally binding. However, they provide a little leverage in the form of someone’s promise on paper, which is both psychologically more powerful than a verbal accord, and also raises the prospect of harming reputations in case the agreement is broken.

These documents are referred to as a weak test of idea validation in the excellent book “Testing Business Ideas” by Alex Osterwalder of Business Model Canvas fame, which also inspired this post. While weak, they are a positive and proactive step which is very easy to deploy at the right time, and can help convince investors that your startup has legs.

Here is a simple template in ODF and PDF format which uses data fields to quickly customise it to different users / future customers (Docx is included too, but is untested). Simply double click on a field in LibreOffice to edit it, or use Insert -> Field -> More Fields -> Variables tab, to list all the fields and edit them faster.

List of all editable fields for efficiently adding your company and (future) customer’s data

When you export to PDF, you’ll see there are interactive form fields which the recipient can use to sign the document, avoiding the distruption of printing, signing, scanning, and emailing back to you (convenience is king, friction is failure, as they say).

Depending on your legal jurisdiction, a typed signature may or may not be acceptable. I am not a lawyer, however in the UK and other nations the intention of a ‘signature’ to be such is sufficient to be valid.

Don’t forget to replace your logo in the page footer, and replace the bullets with your conditions in the center. And if you improve the template then share back upstream! Good luck getting them signe

So, what do you think ?