They valorize the overworking founder with no personal life, and have grown up with not-so-accurate tales of the Big Names who were like that. And so you get quite sincerely held but incorrect beliefs that are shockingly resistant to evidence.
Welcome to the human species.
Only short term -- they don't care for either burnout or quality. The want some shit produced fast they can use to exit.
Probably the most proximate and salient example for me is mathematicians. A lot of them seem to have an almost monkish devotion to math, and breaking their brain day in and day out with little reprieve doesn't seem to bother them at all.
Although entrepreneurs are probably not nearly so eclectic, I don't think it's strange to think they might be somewhat exceptional in this regard.
To me this looks like:
1. Sleeping hours seems to be genetic, telling an 8 hour sleeper to just sleep 6 is going to undermine chances
2. People's productivity seems to drop after about 40 hours per week, especially if sustained long term. Outliers exist, but coercing a non-outlier to try and act like one leads to a reduction in total productivity, not an increase.
3. If investors really want people who are outliers they should find a way to test/verify they're working with outliers. Burning out the leader of a company they've invested in is counterproductive, it will just lead to the loss of their investment. Once the company is funded the investor should do what they can to make that specific person do their optimal path, which may include sleeping 12 hours a night.