Chris, Dave brings you into his confidence. Angel investors expect bad news. The bad news is manageable, but not if I don't know what it is, and especially if it appears that Trueblue or his management team is hiding something. Investment bankers don't invest in technology, we invest in people. Once deal is tainted, it's almost impossible to resuscitate.
First impressions carry on for years.
In all likelihood, the relationship with the investor is more long lived than company. Management teams need to recognize and internalize this. The parties agree to hold a private meeting among key managers, inventor, consultants, and investors to disclose. Working with Dazzle, the hard news is presented along with the potential for the second technology. Dave, you've got this issue with Black, a sticky wicket.