The risk of failure was certainly higher as it was with a lot of unknowns. So, how did Labcoin manage to fail?
You can wonder if it did fail. If your measure of success is alberto's wallet, it did not.
Anyway, my best guess of what happened; howard wang really did have a design for a 180nm chip, it may even have 'taped out' at his university test fab, but it was a crappy design on an obsolete process, and even if they did manufacture some wafers, he chose an incorrect package (perhaps also packaged at the university?).
Somehow Howard got in touch with Alberto and/or fabrizio who jumped on the opportunity to raise money for a 130 and 65nm variant without knowing a thing about the business and without really caring if it would work or not. Designing and deploying an asic is not a walk in the park, Howard didnt have the required skills, no experience with any process other than the 180nm, so they "hired" theseven, who doesnt possess the needed skills either. Alberto was told they needed a design kit from TSMC to do the physical layout for a more advanced process (130nm). TSMC doesnt just hand those out, they cost money and require signing an NDA by an actual company. Alberto tried using his brother in law's shell company for that, TSMC didnt buy it. Thats probably where they gave up and decided to IPO to get funds, buy some external hashing power and keep up the charade. Or perhaps that is where Alberto only really got involved, until then it might have been a bit naive but genuine attempt by howard and fabrizio.
From what both Howard and theSeven said- Howard indeed designed a single core 180 nm ASIC. It was allegedly based on some open source FPGA design (theSeven mentioned an Icarus clone), and it didn't make it to tape-out at all. The next design (130 nm) supposed to be dual core which according to his own words, Howard managed to bring near completion. He then parted with Labcoin and Mr. Noi (whoever that might be, I'll use this name for lulz) was left without any clue where or how to tape it out. BTW the 180 nm design should've been produced at UMC, it was mentioned somewhere in the custom hardware thread.
Funny is, if you remember, how Labcoin announced their 130 nm design. It was meant to be a 16-core device running at 300 MHz, dissipating more than 12 W and using less area than BFL 65 nm chip, it certainly couldn't be anyone with technical background who made up those specs. During the original QA session the guy hiding behind labcoin_dev nick couldn't even tell the difference between rolled and unrolled core design (he was talking about sea-of-gates all the time :-), unfortunately hardly anyone here deemed this significant. And there was only one guy (I believe it was HorseRider, but don't remember exactly) who noticed and pointed out that Labcoin intended to use a MPW service (TSMC CyberShuttle) for the actual production of thousands of dice.
So, I don't believe it was Howard who came up with the idea of developing a bitcoin mining ASIC originally. More likely it was Mr. Noi's inflated self-assurance after he pulled off his former "failed bussines scenario" with ZenPads, which made him believe it was going to be an easy one this time.
