How would we value his 5% shares of a company that has no money now, no product, no revenue. We have some designs, brand design etc, valued patent (although 4 years old now). But we need to do new hardware design, still develop our software.
How was it valued in the first place?...
Talk to a lawyer
Double the initial valuation and give them that divided by 20. Then you can move on. Just a wild thought though.
Guy still doesn't have to sell his shares, he still might want more and you cannot force someone to sell off his shares - only way is to agree on price he will accept. You still might make reasonable arguments but yeah making arguments doesn't make the deal, other guy agreeing makes the deal.
His initial valuation is itself questionable. How is 250k at a 1m valuation equal to 70% for the investor? Sounds like an error on OP's part in the post, or a very painful mistake irl.