I started a surveillance technology company in May 2010. Since the beginning, we have been working with a person that has been in the security industry for quite a while. He was providing some input, and contacts...but no real sweat equity. Originally he wanted to resell our equipment through his newly started security company (that offered more than just our stuff), but has since decided to just focus on our product. He is migrating over to just using our company name and such.
He also wants to invest. After mentioning to him that we were thinking of pursuing a bit of funding (50K CAD) to develop a new product, he jumped at the idea and said he would be interested.
I guess I could treat him as two separate entities: Sales guy, and Investor. But it seems a bit weird. For one thing, since he has a direct impact on our sales right now, he could if he was devious enough, slow our sales until the investing thing started moving forward, so that the company is temporarily devalued.
My question: Is it a conflict of interest to have someone in a independent sales role also become an angel investor? Or more broadly speaking, should angle investors be arms length from day to day operations of a business?
The other issue is I have no idea what to give for 50K. I am hesitant to give any more than 10% as I have had two full time engineers (myself and my partner) working on this company for essentially nothing since May 2010 (incorporated October 2010). But thats maybe another question.