I suggest as a ‘founder’ you are entitled, even obligated, to state your terms. I think you should state to him your offer as a co-founder. If he’s not willing to at least entertain your offer as such, walk away. He’s just looking for exploitable labor. Remember 1% of 0 is still 0. That’s what he’s essentially offering you. Nada. Zilch.
But actually he did you a favor: since you’re obviously interested in founding a business startup, he provided a valuable lesson in how to spot BS offers. How not to treat other people. … there is a lot to unpack there.
There is no sunk cost issue here. Merely time you’ve spent on educating yourself in the world of business. It’s mean out there.