Funny and sad that the commenter lynch mob has a lot more righteous anger -- "Screw them" -- than the people actually involved.
The rest of us don't have anything to lose here, having an investor bail out that far in to a deal is as good as being shot down, there is no way they could have survived it. Also, your sample size is just one individual out of all the founders that got axed, so not 'people', but person.
How the rest of them feel is any body's guess.
We, collectively can put a fair amount of pressure on boot-out labs, more than Jamie could at this point in time, he hasn't got the money to sue them (I'm fairly sure he'd have a case), but even if he had the money to sue them it won't look good on your future resume if you go and sue a former investor.
The right way to handle this would have been to reverse the deal and to compensate all those wronged by it, there are plenty of ways that could have been done.
http://techcrunch.com/2010/04/15/the-curious-case-of-vancouv...
The 'deal' was reversed in that no equity was requested even though some material assistance was provided. If hypothetically a startup was willing and able to continue in Vancouver even without the foreseen investment, the whole episode could have still been net-positive. If the startup was derailed by the detour to Vancouver (as appears to be the Status.ly situation), the whole episode appears net-negative.
If there's not enough cash to make the full investment, and already ~$10K or more has been spent on the companies released from the program, what's the additional 'compensation' amount that would be fair? Airfare back home? Some hypothetical opportunity cost that was forgone based on their hopes in Vancouver?
Jamie might have a legal case but if there's one email where BL reports, and Jamie acknowledges, that the funding is still pending and conditional on other uncertain factors, that case could be shot.
That's called pre-contractual information, which is supposed to be given freely so the other party realizes the risk. They did nothing to warn them the money was not available at all, and might never become available.
In a court case that would probably have 'legs', even if getting to a judgment would probably cost more than it's worth, and they seem to bank on that not happening. But there are more ways to skin a cat and the internet is a great place to put such things to right.
The way out is to compensate them for the expenses they made that they would not have made if they would have been properly informed beforehand, so that includes the funds to re-locate back to where ever they came from and a sum of several thousand dollars to get started again.
Figure another 5 to 10 grand per founder and you should call it quits and consider the matter settled as good as possible given the circumstances.
If they don't have the cash they could do an iou redeemable a year from now, or when they take on their next round of funding.
You break it, you own it, and a real 'sorry' includes compensation.
We agree about the one email, if that exists it's a different story, but then I think that mea culpa would never have been written, clearly there is a party at fault here, by their own admission.
When trying to make something new happen, you almost have to express preemptive confidence, and gloss over some of the caveats applying to outlier possibilities. You say, "We have the investors all lined up", not "We have the investors all lined up, as long as the people I believe are solidly reliable remain reliable". 99 times out of 100, avoiding such pedantic qualifications helps the joint effort. Sometimes it blows up. Here it blew up, and then slow communication made it worse, but such mistakes happen among the ever-hopeful.