diff --git a/dev/start b/dev/start
index 14c022bb..e4d70ecb 100755
--- a/dev/start
+++ b/dev/start
@@ -11,6 +11,11 @@ function v5_development() {
   docker exec -e CONJUR_AUTHN_API_KEY="$api_key" -it --detach-keys 'ctrl-\' $(docker-compose ps -q gem) bash
 }
 
+# Set up VERSION file for local development
+if [ ! -f "../VERSION" ]; then
+  echo -n "0.0.dev" > ../VERSION
+fi
+
 docker-compose pull
 docker-compose build
 
diff --git a/test.sh b/test.sh
index 7ade9146..6a04eb97 100755
--- a/test.sh
+++ b/test.sh
@@ -13,6 +13,10 @@ function finish {
 
 trap finish EXIT
 
+# Set up VERSION file for local development
+if [ ! -f "../VERSION" ]; then
+  echo -n "0.0.dev" > ../VERSION
+fi
 
 function main() {
   if ! docker info >/dev/null 2>&1; then