Why startups burn cash

I dont understand what is point of geting funds and hiring 20 pepople, if you can do same results with 3-4 people? Having offices in US, everything is ridiculously expensive, you can do same in Europe, with same quality employees. I heard that many VCs require startups to move to US if they want to get investments. So whats the deal, why they do that, and why startups burn cash? Does your valuation increase if you have more employees or something