Before this point, he was your good partner and now he wants something which puts your business at risk (at least you see it in that way). I work with programmers, they tend to reuse their code whenever possible. You don't need to be a programmer to know how copy/paste feels good. Also this is the only guarantee he has for his effort (he is not paid for that and you agree he deserves what he claims except problems you may encounter in financing). What is important here is, he should feel you worry about whole project which belongs to all of you and the problem is not his bigger piece of cake. Then you can agree with him to drop this claim if investors get reluctant. You can do what should be done earlier:
Bring this to paper beside his claims plus your rights on IP (consult an attorney)
After all, you have documented your fail plan and signed it (which he is responsible for it). To investors a good team is more valuable than a good idea or implementation and that agreement with generic code condition signals them you are not a team. Real risk is this.
Go to experienced people you both trust and ask if this condition is a risk to investment. If they say yes (as I mentioned my reason) he feels how his little claim ruins all the efforts. At this point you can write a new agreement and replace the old one. I believe the real agreement cannot be written at first. It should replace a previous one which puts blames on him (signaling we are not a team), also keep enough of your right in case of break up (he cannot use the code somewhere else easily since you have settled done him, even for 1% of your rights on IP against his 99%, then the code becomes useless to him).
This is your first misunderstanding and you will encounter much more in your career. Tolerance is vital to partnership.