pretty much rocked the answer to your questions, Dimitry, so I'll focus on what's next.
1. If you want to be a founder, and have the leverage, do so in terms of ownership, not just in name. And make sure you're on the same page with your co-founders in the areas of organizational culture, risk tolerance, end goals (IPO, acquisition, run as a hobby? valuation?), and more.You can find other questions to ask online.
2. If you intend to stay with the company, ask to meet the investor, at least by phone, ideally in person.
a. If not allowed, ask for the reason.
b. If the reason is dumb or bad, add that to the RUN AWAY side of the ledger.
3. If you like the investor, reconsider that $2.5M valuation. It does feel high, at least on the facts you gave us. Many, many startups have foundered on the ego- (not market-) driven nature of the first valuation.
4. Find out what, exactly, has been in "advanced negotiations" for so long - and in any event make sure you have a contract with a provision stating your partner warrants that all representations about ownership, number of investors, number of co-founders, etc. are true and accurate.
5. Ask your partner to defend his reasoning for seeking financing. Give him your view. Back it up with examples, facts, reason. Once you've talked to one another, consult some mentors, or come back here.
6. Larry means well, but I believe he jumped the gun on deciding what was in your head. I read "I may be right" as an expression of both relief and concern that your hunch has been validated by others, and now what?? Larry, we love you.