Ask HN: Why do startups need so much money?

Before I get downvoted for this, let me explain myself. This is an honest question that has really been bothering me - especially lately, with all of the Yuri/YC hype. When I think of a typical tech startup, I picture of a handful of brilliant fresh-out-of-college guys that are passionate about making things and solving problems [I know this may not describe the majority of startups these days, but it's all you hear about in the media so let's stick with it for the sake of this discussion. Obviously the expenses are significantly higher when founders have families to support, mortgages to pay, etc.]

Anyway, I happen to be one of these guys (though a single founder), so I know exactly how much it really costs to get by on your own - here's some perspective. I live in a cheap 5-bedroom apartment on a college campus (Champaign-Urbana IL) and drive a gas guzzling SUV (approx 11mpg). Entertainment is negligible since I don't drink and rarely go to movies and such (that's all there is to do around here). My combined expenses for rent, food, gas, and bills sits right around $600/mo. I don't have a job, so for now, all of this is being paid for with the remainder of student loads and whatever I can scrape up. I am fortunate enough to have supportive parents that are covering my insurance and phone bill (family packages) for the time being. Even then, my total expenses should come in below $1000/mo.

So, back to these other young startup founders. I think it's safe to assume that their circumstances are similar to my own, though I realize that cost of living is higher in the valley - especially rent. I am only focusing on living expenses because they account for the vast majority of expenses for young startup founders. Most YC startups say that almost all of their YC seed money goes toward rent, food and bills. They rarely outsource work, do almost everything in-house, and usually wait several months or even a year before hiring other employees. Server costs are minimal and offices non-existent.

Knowing that, I can't imagine the need for so much money. Every day I read about startups that ran out of money and just couldn't keep going, but honestly - how much money do they really need? Maybe I am naive, but young founders have the extraordinary advantage of minimal expenses and plenty of time and energy, so I don't see how this is possible. Why do founders need hundreds of thousands or millions of dollars to "extend the runway"? I'm pretty sure I could live on that kind of money for several years.