They are in a position to provide us with a decent sum of angel funding, and they also are fully aware of the risk involved. Actually, they are quite excited about the risk.

Everyone always is, because they're only focusing on the upside and not on the fact that once they give you $25K, it's already lost.

I didn't spend three years studying psychology to learn nothing. You're blatantly conflicted, if you thought it was a good idea you'd have taken the money anyway. There's no reason you're on an anonymous news site asking advice and when people make comments you're trying to back it up.

It's obvious they're aware it's a high-risk investment, I'm saying statistically you've already failed. If you can't say without a doubt that you're going to succeed then don't take their money because when you fail, you'll need the friends.

I honestly hope you succeed, but my advice will be the same. Friends are worth more than success or failure and money is too big an issue to have it in a friendship.

I am not conflicted about the process whatsoever, I just wanted help figuring out how to go forward with this investor.

A wash is merely a break-even situation. Maybe you meant a total loss.