Re-inventing the wheel and premature optimization are red flags in software development. I can't say I'm surprised they never got around to building a game. Based on their approach, it looks like they suffered from an XY problem. Was inventing a new game engine really the right approach from the start? In hindsight, looks like it wasn't, and I'm surprised they continued that approach for so long.
It's mildly infuriating when the wrong team gets backed to build something. This is why the founders matter so much. Anyone can have a great idea, but it takes the right people to execute on something. Looks like this team was unprepared to build what they imagined, taking funding for X and then spending all of their time on Y, where they thought Y was a precursor to X, when it actually wasn't. If I was a backer, I'd be incredibly disappointed.