If I were in your shoes, I'd either get them to sign an agreement giving up all claims to the business/idea or I'd go find another idea to chase. Alternatively

If I were in your shoes, I'd either get them to sign an agreement giving up all claims to the business/idea or I'd go find another idea to chase. Alternatively, you could sign a an agreement that says you EACH have full rights to pursue the business and don't have claims on each others efforts (i.e. effectively open-sourcing the groundwork you've laid to date). That is, unless you are convinced that they wouldn't/couldn't sue you if you built a business worth suing.