Why would it contain the potential to turn of customers? Is not what is central is that those who benefit can continue to receive the benefits?

The best means I know of is to use a Critical Factors Assessment available from the non-profit Canadian Innovation Center in Waterloo http://innovationcentre.ca/ under Tools. It was designed for exactly the purpose you seek.

By the way simply posing the issue augers well for you success

Answers to your questions are interrelated through your personal capabilities and personal growth objectives in the context of the demands of building an organization custom fitted to the opportunity's potential, hiring the right people to sit in the right seats and tolerance of prolonged uncertainty. Answer these and the rout to getting the right kind of money from the right kind of people is greatly clarified.
Will explain further if you wish.

As pointed out, there is no good answer based on business logic. What I would do is to ask the lead investor if there is one, what target multiple the want to obtain on their money, a 10 X is low, and when they expect to obtain it an how. The you can ask if the 1% per $25,000 will do that for them.

Avoid any attempt to do it based on projections, even if you have some revenue. The product will probably change so as to invalidate such a "promise".

How will the money you obtain be "paid" back, do you want to make the payment in that way and can you afford to make the "payment" are the questions you should address to see if you are raising too much money from the wrong sources.

Most pitches fail to address two fundamental issues faced by angel investors. In order of importance they are:

1. can these founders build this business so it becomes profitable; and
2. how and when will my capital be returned and how large a return is offered?

I suggest you not pitch anyone. Instead obtain a Critical Factors assessment of your business as the basis for inviting angels to discuss and shape the opportunity with you. Learn what they can contribute. Is it what you need and want?

In parallel, get some third party assessments such as the HBDI profile of each team member, sales aptitude and sales knowledge etc. How do the profiles stack up against the demands of the role they are expected to fill? The CEO role is critical: the wrong person will almost assure failure of the business.Most firms fail because of the people issues so tackle them systematically from the beginning.

There is more on this pitch replacement approach at www.thekemballgroup.com The Dog's Bark.

Do not use a convertible note. Widespread as it's use is, what is critical is alignment of incentives between the parties.

Both should be clear with themselves and the other, what their target return is; for angels a multiple of the amount invested; and for founders the increase in net worth they seek as a result of the businesses success.

Fair has nothing to do with it. The word is a smoke screen for lack of hard thinking about whether or not there is a basis for a deal between the parties.

It is well known in the angel community that it takes more than a person month of due diligence to have a reasonable prospect of a return on capital.

Anyone you want to work with over a decade or more will do tombstone due diligence on the past to ensure that its dead hand will not undermine the future.

At least as important is to assure themselves that the CEO has the capability to build the business and grow with it. As a founder it is in your best interests to have this done as if you were being hired to manage the money under very difficult and unforeseen circumstances. This is a case of an ounce of prevention. Have a look at the history of Google to see what is at stake for all.

Most firms are not able to create enough wealth to pay the going rate for angel capital, more than 10 time capital invested, and leave an equal amount for themselves and those in the firm.
What basis do you have for thinking your firm would be an exception? Have you received a Critical Factors Analysis profile from the CIC at Waterloo?

Complete the following sentence Stealth has developed or is developing .... that solves the problem of ..... for ......

When completed you should be able to identity venture capitalist firms who wish to and or have made investments in that space. Corporates are more problematic if your reasons for stealth are to avoid the industry they are in. Angels are also problematic we typically syndicate which raises more possibility of them doing due diligence where you might find your cover blown.

Hope this helps