I am new here but I was a dotcom CEO in 2000 and raised $7M from Hummer Winblad and Draper. It was in the B2B space. Since then I have helped out a number of friends with VC pitches and plans and been an Angel investor myself.
SkyEnt, there are some positive aspects you should know. First of all, put away your fear. He knows that it is an investment and they sometimes go down the tubes. If he has $50K to put towards your stuff it is a very big endorsement of your skills and execution abilities.
Your concerns and his will be put to rest if you both decide what the plan should be if the worst happens and it just doesn't make the bucks. Get that out of the way first. Then here is how to proceed:
1. Did you go to him, or vice versa? That's a biggie. In fact I hesistate to go a lot farther in this post until I know.
2. The business plan document is not really hip anymore. Mainly they are used to determine if the guy is a knuckle-dragging moron who can't spell or add numbers together. It is not a problem to ask him what specifically he wants to see. There are no standard templates. He is probably gonna ask for:
a. Financial pro forma or projections, also know as P & L. This is not as big a deal as it sounds. It's just a month by month spreadsheet with costs and anticipated returns, broken down as specifically as you want to. This is to give him some reasonable comfort that you know what to do with the money over X period, and you are working towards X return.
b. At least an executive summary (1-2 pages) saying here is what the business is gonna do, here's why it kicks ass, here's the shit you do that nobody else does, and here is what you expect to be able to return on the investment.
c. Investing in Aff is pretty unusual. I am gonna guess that he doesn't want an equity percentage of the company; just a portion of the proceeds. If I am wrong correct me.
3. You are a young dude but he knows that young dudes are way ahead of the curve of us old turds and that's where the talent is. You're not expected to be Elon Musk yet; you are great at what you do, so just stick with that. Finding you is obviously a great opportunity for him and you know shit that most people don't - so my point is, don't feel bad because you don't know about all this investment shit. None of us did when we were first-timers.
4. You need an attorney. He has one, but that's his attorney. Almost always, an attorney is also selected to represent the company. This can be done for a couple grand. This attorney is needed to review what his attorney comes up with and make sure you're not getting assreamed. If the investor is a friend, you won't get assreamed upfront, but later, when money starts coming in and you each think you should be getting more than you're supposed to.
5. Lastly you guys will have an awesome relationship, and he will be totally stoked - if you kill him with communication. Give him daily access to your stats, keep him up on your schemes and plans, and he will keep shoveling you more $.
Keep me posted on this...
