Memorandum of Understanding (MOU) is currently used to define mutual interests between two companies to pursue a business project or relationship. A MOU is a written document that outlines a preliminary agreement between two
parties regarding the terms of a potential purchase or other transaction. It is a road map as to how the negotiation and the deal will proceed. The two parties can settle on certain terms while agreeing to continue to negotiate
the other terms and details of the transaction before actually signing a purchase agreement. The MOU is not a legal binding document; it is a written expression of interests for 2 companies to engage in pursuing a business
project or relationship.
Some startups do not understand the importance of using MOUs to show “traction” or accomplishment of the business. They don’t understand the process of producing MOU’s and how to use them to attract professional investors
Startups should engage potential business customers and/or partners in discussions of a business relationship that has mutual interests of both parties. Initial discussion could start prior to design completion of the product.
The MOU should be jointly signed by both parties expressing an interest for business co-operation. The signed MOU’s could be presented to potential investors who can then gain better confidence that the startup has a viable
product or service.