Concerns Raised Over Web3 Startups' Business Closure Practices

According to PANews, Arthur Cheong, CEO and CIO of DeFiance Capital, recently expressed dissatisfaction on social media regarding how some Web3 startups handle business closures. Cheong criticized the lack of communication with investors when these companies shut down, describing the practice of "quietly disappearing" as unacceptable. He emphasized that even in failure, companies should at least send an email to investors with apologies and gratitude. Cheong referenced a post analyzing current venture capital models, highlighting issues such as lack of oversight, weak accounting foundations in startups, minimal decision-making power for investors, and a tendency for investors to focus on successful projects while neglecting failed ones. The model relies heavily on the ethical conduct of founders, but in a bullish market with abundant capital, founders might benefit personally through high salaries, bonuses, luxury travel funded by the company, renting personal office space to the company, or paying fees to affiliated companies. The post pointed out that these practices not only benefit founders significantly but also enhance their professional profiles, while investors' returns may decrease substantially or even become negative. Cheong agreed with these observations, stating that such situations remain unacceptable.