VCs get a management fee and a carry. They also invest some money into the fund. Their management fee de-risks them entirely.

You can't group VCs and founders on one side and engineers on the other. It just doesn't make sense.

Arguably the most financially successful founders are marketing-led, not technology-led. And some are perfectly happy to set up low-to-zero prospect companies, raise millions through networking and confidence, spend the millions with a good chunk going on their own salary/expenses, apologise to everyone in a punchy yet apparently humble post-mortem when the idea fails, and then do it all again.

In reality startup land is a scammer's paradise on all sides. Some people knowingly run a con, some are delusional, some are sincere but unlucky and/or lacking the skills/contacts/presentation to make a good idea work.

All of the above can get funding, especially in boom times. So there's surprisingly little pressure to build an ethical, product-focussed, engineer-friendly, stable business with lasting potential, and plenty of reward for not doing so.

It shouldn't be a surprise if there are people who take the bait - on any of the possible sides.