There is also option (3), somewhere between (1) and (2): Explore the problem space and make a start while working for your previous employer. Slowly reduce the

There is also option (3), somewhere between (1) and (2): Explore the problem space and make a start while working for your previous employer. Slowly reduce the number of hours you are working (i.e contract vs fulltime). Once you are getting some interest / traction or feeling more confident, switch over to (2) - now much less risky. Go fulltime with a 1/2 built business with several potential customers and perhaps a couple of paying ones. You are now much more attractive to investment.