Last year we started a software firm, we have managed to build a good technical team and do a couple of projects which helped us hang around. Recently we had an offer from one of the investor to invest up to 220k and also assist in building up contacts and business. Currently our firm has got 5 working partners. We are building some products in parallel other than concentrating in service sector which is not yet prototype complete. How much percentage share do you guys think that investors deserve in this firm? He expects 50% profit share and he is ready to leave majority of ownership/decision making share to us.
This answer will give you a great start on how to divide up the equity in your firm and give you a framework on how to approach it.
Now, for your specific example, it looks like this investor expects 50% of the company because he wants 50% of the profit. I'm not sure that makes a whole lot of sense.
I would calculate how much you guys have put in (dollar wise) and then see what percentage his 220k would be. That would give you a good start on what percentage the new investor should get.
Also, read the answer above for some additional guidance.
You should also consider what amount of effort you will put in the future. This is part of your share too, considering the investor is not going to put more money each month.