Yeah makes sense. I have read PG's post on doing a startup parttime and it was in the back of my head the whole time.
Don’t worry about the funding - negotiate an exit that’s fair to everyone if necessary, taking into account the work you’ve done to get to this point.
Better to cut your losses and work on the underlying issues that you hint at in your post.
If you’re not sure yet, then take your time and be as upfront with your colleagues as you can.