We don't want to give away too much of our equity. If the funder gives us a higher valuation, we will give ask for more money. If the valuation is lower, we will go with Plan B and ask for less money. How does this get negotiated in the Angel funding?
Firstly - I think you are in a decent position. Any angel worth their salt will know that this is a negotiation and a fine balance between disincentivizing the management team and getting what they perceive as a 'good deal'.
Their are two sticking points as I see it:
1. The angel believes you are undercapitalising - occasionally you may need a reasonable amount of funds to generate product/market fit or to build the operational infrastructure to make/support sales. If the capital isn't available to reach these inflection points then it presents a serious systemic risk to the business.
2. The angel perceives that you are fixating on is valuation, for valuations sake. You have chosen an arbitrary number and in your head even if Peter Thiel offered you the money you, would still refuse on principle.
I think what troubles me about the way you've presented your question is it seems like a flick switch. If a then b, if b then a, you are curating a round of funding, that means if this guy gives you options above and beyond money then it's worth understanding and weighing up the associate benefits. He may reduce your marketing spend by x, he may have a black book that gets you into the offices of the key decision makers you are after. If this is the case then you are reducing your slice but ultimately ending up with a far bigger pie.
I think set out a considered and well worked rational for both scenarios. However, one thing I would say is get back up options in place. The one thing I do know from experience is you have a plan A and a plan B, but if he strings the conversation out till you are running low on cash then you will be wishing you had a plan C. As at that point he can call in any chips he wants.
I really don't think you have a problem though, bootstrapping and lean methodology are all the rage. Just suggest you want to solidify the business before accelerating it.
My last warning would be....if he is fixated and a defined % ownership probably worth questioning why. Investment is about cohesion and an angel that is willing to support you (you being the individual), a one size fits all for anything in life should be treated with suspicion.