Private money investors - how is their investment protected?

[Jonathan Alexander]

I recently listened to podcast #166 and matt aitchison spoke about when he would talk to private investors about potentially investing and he rattled off some ways in which he helps the potential investor feel confident and secure about investing with him.  I know there are no 100% guarantees but what can you tell the investor besides the agreed upon split of profits, that'll help them feel better about it?  People often say its a tangible asset but if the investors name isn't on the note, how do they have any recourse for it?  Besides laying out potential profits, what else can you tell them will take place, if worse case scenario happens, and you know what hits the fan?  How is their investment protected?