I run a small startup. It's 2 people (myself and my brother). We have established not only product market fit, but extreme customer stickiness as well as traction with some really big clients. Slow and steady as we go.
We still burn through the little cash we have (haven't raised yet; just reinvesting all proceeds into the business) even without paying ourselves. Turns out that marketing and brand awareness is tough. That said, it's probably easier for some tech products than a physical consumable good (I am in the food space) because you don't have to constantly make the product, you build it once and you ship it. You might update it but your core functionality is complete(ish).
But to your point - too many startups I've come across are simply solutions looking for a problem. And those solutions are raising stupid amounts of cash, somehow. I don't get it. I'm in South Florida. I can't tell you how many times I've gone to tech events (I am a former tech PM just wanting to stay up-to-date with the happenings in my city) and heard of some insane idea that's managed to raise millions at a pie-in-the-sky valuation.
Who in the hell is funding all these clearly dumb ideas?
Some companies' only raw material is cash.
Even sometimes when it is actually other people's money, i.e. capital.
Some companies prosper by adding value to their raw materials, other companies not so much.
Looks like they all consume raw material anyway.