Bringing in an outsider to handle the "business" part of the business, especially when bestowed with a title like "CEO" over top of the original solo founder, is a recipe for a lopsided relationship. And it's somewhat unfair on your part to expect that another person can suddenly leap in with the same passionate drive you have for a product you built yourself for over a year. But honestly the fact that you're in different countries makes it that much worse.

Regardless, my understanding is that we're entering a dry period for capital in the tech business right now and investors are pulling back from tech startups in a big way.

If this is true, VCs are going to raise the bar quite high. A few years ago just the fact that you are in 2 different countries would be an automatic disqualification for many investors. And they can clearly see that not only are you collaborating remotely but you sourced someone and more or less put them in the driver's seat as your bizdev proxy.

I suppose the outlook was a lot more rosy back in Nov but it's frankly surprising that they even let you in the door in the first place. The investor gave you a very clear rational reason for backing out.

Your CEO's passion for your business isn't something you can force either. They see the risk as well. Unless your product is just mind blowing, which maybe it is given the interest, you're not going to raise money easily with this configuration.

You have a high bar in a difficult time, and a limp partner is the last thing you need. So yes you need to address this head on. Hopefully you can regroup, bootstrap a little longer and try again when you're on firmer ground