Steven, I'm no expert in this area, but from what I understand, that's just one option, and it sounds like one of the harder options.
To be able to self-direct your 401(k), any investment needs to be at arms-length. Basically, you're not allowed to use it as you would a personal bank account.
I also think you left out a very crucial piece of information. What's the relationship between you and your partners? Are they your friends and you've reached a verbal agree to that you're partners, but you're providing most of the funding because you have it? Or, have you and your partners formed a legal entity? Or entered into some other type of contract?
I'd get this last part figured out because it will also play a role in what or how you do anything.
All the best,
Zoran
