Yes, our costs (even without wages) exceeded the revenue and would do so for a while. Revenue lagged behind the growth of costs, as is usual for affiliate revenue when the communities are being built rather than traffic being purchased.
The risk therefore was to the investors, whose support we needed to continue even though we hadn't secured more experienced angel or VC support (not a good signal).
"It feels very much like we would be creating an enormous amount of extreme risk (the foolish kind)"
I'm puzzled what the risk was, unless you would still be losing money even with no wage costs?