Did I just closed $75 Millions in 2 weeks of selling?
Two weeks of selling. $75 million in signed LOIs. $3 billion in ARR under negotiation.
These numbers sound like validation.
They’re actually the beginning of the real work.
I’ve been on both sides of this conversation across dozens of ventures. The LOI that looks like commitment often means “interested enough to sign something non-binding.” The pipeline that looks massive sometimes converts at 15%.
The customers who seem locked in evaporate when the procurement process starts.
Understanding what LOIs actually represent, and what they don’t, is the difference between realistic forecasting and venture capital theater.
The LOI Hierarchy
Not all LOIs are created equal.
The strongest LOIs include binding exclusivity provisions, deposit payments, and specified consequences for withdrawal. These represent genuine commitment with financial teeth. They’re rare.
More common are LOIs that express intent without creating obligation. They serve useful purposes: they document interest, establish negotiation frameworks, satisfy board reporting requirements.
But they don’t predict revenue.
The weakest LOIs are relationship maintenance tools. Potential customers sign them to stay informed without committing resources. They create pipeline for your investor presentations without creating revenue for your P&L.
When someone cites LOI volume, the meaningful question is what kind of LOIs they’re counting.
The Conversion Reality
From the $75 million we generated in two weeks, realistic conversion expectations depend entirely on what happens next.
LOIs with specified technical requirements and procurement timelines convert at 60-80% when the underlying need is real and urgent. The customer has already done internal work to justify the purchase. The LOI documents negotiation parameters rather than exploration interest.
LOIs expressing general interest convert at 20-35%. The customer is intrigued but hasn’t committed internal resources. Procurement processes haven’t started. Budget allocation hasn’t happened.
LOIs from contacts maintaining relationships convert at 5-15%. The signer has authority to express interest but not authority to purchase. The actual decision-maker may not know the LOI exists.
The same dollar value of LOIs can represent wildly different revenue probabilities depending on which tier dominates the pipeline.
The Due Diligence Conversation
Sophisticated investors ask what portion of pipeline is contractually committed versus LOI versus early-stage discussion. The question reveals they understand LOI dynamics.
Less sophisticated investors treat LOI volume as validation without understanding conversion variance. This creates perverse incentives: companies optimize for signable LOIs rather than convertible revenue.
When asked about our $3 billion pipeline, the honest answer requires segmentation. What’s binding? What has deposits? What has specified timelines? What’s interest without commitment?
The number that matters isn’t total pipeline. It’s weighted pipeline with realistic conversion probabilities applied to each tier.
The Timing Trap
LOIs also have temporal dynamics that dollar values don’t capture.
A $10 million LOI from a customer ready to procure in 30 days is more valuable than a $50 million LOI from a customer exploring options for next fiscal year. Revenue timing affects cash flow, hiring plans, and expansion sequencing.
Early-stage companies especially need to understand which LOIs convert in the timeframes that matter. An LOI that converts in 18 months doesn’t help if you run out of runway in 12.
The Procurement Reality
Enterprise procurement processes exist to prevent exactly what LOIs represent: individual decision-makers creating organizational commitments.
The LOI signer might be genuinely enthusiastic. Procurement might still add twelve months to the timeline. Legal might require contract modifications that change unit economics. Security review might surface requirements that delay deployment.
The path from signed LOI to recognized revenue crosses multiple organizational boundaries that the LOI signer may not fully control.
What LOIs Actually Tell You
Despite their limitations, LOIs provide valuable signal.
They indicate that someone with influence found your value proposition compelling enough to document interest. That matters. Indifference doesn’t generate signatures.
They create relationship permission to continue engagement. The LOI signer has invested social capital in the relationship. They’re more likely to take meetings, provide feedback, and advocate internally.
They establish pricing and term expectations before detailed negotiation. The numbers in the LOI become reference points that anchor subsequent discussion.
These are real values. They’re just not the same as committed revenue.
The Strategic Use of LOIs
Smart companies use LOIs strategically rather than treating them as revenue proxies.
For investor conversations, LOIs demonstrate market interest while conversion rates demonstrate execution capability. Both matter. Either alone is insufficient.
For operational planning, LOIs inform capacity requirements while weighted conversion rates determine resource allocation. Building to serve every LOI guarantees waste. Building to serve zero LOIs guarantees missed opportunity.
For sales management, LOI velocity indicates top-of-funnel health while conversion rates indicate sales process effectiveness. Optimizing one without the other produces incomplete results.
The $75 million in LOIs we generated matters.
What we do with them matters more.
JF is a C-level executive and serial entrepreneur who has founded 110+ startups. He runs the AI Executive Transformation Program in Prague and writes about uncomfortable truths in AI implementation at AI Off the Coast…
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