VCs gave you money for a VC business, you get to turn it into a "lifestyle business" with no or little obligation to them anymore.

Your employees joined what they thought was a growing startup, then you lay them off after they built the product because there's no need for them anymore since you're not trying for hypergrowth.

Kinda shitty all round except for you.

Because that's what happens for most startups.

VCs aren't screwed because they already accounted for the risk of failure. That's kind of their job.

Target smashes damaged goods instead of selling them at a discount so employees or customers don't purposefully cosmetically damage things they want to buy.

If the failure state of a business is "the founder can buy it for pennies and try to make something of it", then why wouldn't all lifestyle businesses pitch themselves as VC-backed growth businesses and then use up all that money and settle as a lifestyle business?