How can you reduce IP liabilities if your co-founder works on a loose contract basis with a company operating in the same/similar domain?

I think that anytime you are transacting with significant amounts or investments without a contract you are asking for trouble so the short answer is, YES, the lack of a contract is bound to work against you because the one time you do not have a contract is the one time the parties are likely to end up fighting about the business arrangement. In the U.S., contracts involving a high enough amount need to be in writing or they won't be enforceable. In the absence of a contract, the next best thing is to maintain a solid paper trail of evidence showing everything that has occurred in the transaction that is relevant to your claim or position.
The intellectual property or business "know how" of each company should be governed by a license agreement.