[trizk]

Never give away control of your company for money. If the investor had your vision he would have built it without you. What is going to happen is you are going to fight over the direction of the company until it ultimately fails. The is especially true in equal partnerships. Disagreement quickly leads to stalemate.

The amount of money and valuation are extremely low. Show him examples of funded companies in your space (see CrunchBase) and talk about typical startup valuations based on your space and how far along you are (maybe $1M to $5M). Offer him an investment opportunity of a maximum of 20% of the company for the money he is putting in. That should bring your valuation to roughly $1.5M which is still fairly low and keep you in control of the company for this round and the next.