> 1. You really did disappoint at the end of your internship. I've seen this happen. People get complacent. Take a good, hard look at what you've done and see if there's any truth to it or that someone could get that impression
But why, then, make arrangements for his return instead of just telling him they couldn't promise anything just yet. The response he got just screams "something went awry on our end / the visa is getting too expensive / we found an equally good candidate here that costs us less, but we don't want to tell you so let's just blame it on you instead."
Because they did not handle the situation gracefully. But a screwup on their part doesn't obligate them to hire someone they've decided is a poor fit.
Put any moderately large company's activities under a microscope and you will find things to get "message- board- upset" about almost every day. People screw up.
But this isn't a moderately large company, and while it is not possible to get the full story from just one account, if one is to accept the OP's account as fact, then it is fairly poor form being shown from those running the startup.
By not being honest (or blunt) enough they've basically left this poor guy in total limbo. If you are going to mess with someone's life the minimum required in return is 100% honesty and unambiguous communication. If not now, as soon as possible (in the event that funding has fallen through and they don't want anyone to know right now).
I agree that your explanations are quite possible and hinted by the reported facts. But also, there can be communication problems inside the startup as well. Maybe the people sending the strongest "can't wait for your return as full-timer" signals hadn't yet heard others' concerns. Maybe even the founder and lead engineer are being squeezed from other stakeholders. And even though a legal complaint is unlikely (and unlikely to succeed), liability concerns can lead to strange omissions and spin in the 'official reasons', to provide maximum legal cover 'just in case'.
But why, then, make arrangements for his return instead of just telling him they couldn't promise anything just yet. The response he got just screams "something went awry on our end / the visa is getting too expensive / we found an equally good candidate here that costs us less, but we don't want to tell you so let's just blame it on you instead."