I don't think that you are able to give a percentage share of the company with a sole proprietorship. By definition it is owned by him alone and if you transfer the IP to the company, then you are transferring it to him and you have no stake. I am not sure what effect a contract would have, but I think he would be in a position to do what he wanted with the company and you'd have no official stake. For example, what if he sells the sole proprietorship before he gets funding?
As an LLC, I know that you can specify shareholders. I have seen people do this for family-and-friend investors. Although a full-fledged startup typically runs as a corporation.
If I were you, I would insist on creating a corporation (or at least an LLC). From what I've seen it only costs $1,500-$2,500 for an affordable lawyer which isn't really -that- much if you're serious about building a business here. You can even do LegalZoom though it's not typically recommended, but you can just re-do your corporation when you get funded. But the point is that at least your interests will be protected until then.
Personally I'm running as an LLC because I'm not expecting to get funding. If I was actively looking for funding I would have just started a corporation.