Would there be any IP violation filed by my employer since the idea
was originally pitched to him during my employment with the company?
You don't state where you are located, but very probably. The company may claim it as "work product", even if you did it on your own time with your own equipment. It really comes down to what your employment contract says on the matter (and to an extent any company handbook / rules etc). Many contracts have an explicit clause which states that any product created whilst employed by them belongs to the company.
Of course, they can claim and file suit for anything at all; that doesn't mean it will succeed, but doing so has been known to be used to mire a small competitor in legal delays and costs until they go out of business.
I don't want to damage my relation with employer.
Who does? But you can't make an omelette without breaking eggs. Try to minimise the damage without conceding too much of your new product.
Advice (and take your time to think this over, maybe with lawyer, because I'm really just guessing).
You need to remind your employer that they should focus on their business, rather than just one little part which may contribute towards it. They buy in stationary and tech equipment; They buy in (lease) their operating systems rather than write them. Your product should be just another line item on their quarterly outgoings.
Of course, if there's real money involved (and I'm guessing so if you're looking at funding), they will probably want to own it to add that to their own revenues.
This could be a good opportunity to suggest that they become an investor; Point out that if they own a stake in the business, they have a degree of control over it and can take a share in the profits. As the main customer they can also request features and changes (all customers will do this anyway, of course).
Give them the opportunity to buy in now at $$ for x%, with the option to buy a larger amount / all later, when the company is worth tens of millions.
This won't be easy if they think they can get your product by simply laying claim to it, or threatening your job, but nobody wins that way; You need to pitch this such that everybody wins.