... I would be the financial backer at least for the first year. ...
Thinking more about this makes me more certain that you should just bail. Consider some cases:
1) This is a significant amount of money for you and if it goes off the tracks it will hurt. So --- bail.
2) This is not a significant amount of money for you and if it goes off the tracks the grief and risk is not worth the small amount of potential profit. So --- bail.
3) This company has huge potential, you can afford the risk in order to be a principal in the next Amazon. Sit down. Take a deep breath. Consider the odds against this happening. bail.
If you are still resisting bailing, have your attorney run full background checks on your potential partners and any of their previous businesses. Leins, judgments, etc. for sure. If anything looks at all stinky or even slightly suspicious --- bail
If you are
still resisting bailing, take the business plan -- marketing and financials to a disinterested third party for a detailed review. Try
https://www.score.org/ or your CPA. If there is no written business plan with financial detail --- bail.
If you are still in the deal, take the participation agreement, the buy/sell agreement, the indemnification agreement, and any other agreements to your attorney for review. If these agreements do not exist or cannot be made acceptable--- bail.
One of the cute little risks you face is joint and several liability for employee tax withholdings that are due to our uncle but not paid. This is a very common occurrence in a failing business where cash flow is a problem. ("We'll send it next week.") To collect, the IRS goes straight through the corporate shell and pursues the business owners for the money. "Joint and several" means that they can go after whichever of the owners appears to have the most money. IOW, you.