[gist]

> I'm sure it's a bit more complicated than this and we'd need to see all correspondence, etc. to give an informed opinion

Exactly. We are hearing one side of a story. We have no idea of what promises were made by the startup to the VC firm. (Or vice versa) Those promises could be construed as a contract with enough of a leg to stand on for a suit to be filed. Doesn't mean that the VC firm would win but the important lesson to be learned is that someone who feels wrong can file a suit and potentially extract a settlement which may be cheaper than fighting litigation.