There are far easier ways to get money than raising money for a startup. If two founders raise, say, $500k, under most circumstances they'll work a lot harder and earn a lot less than just working for Amagoobooksoft as engineers. (Remember, it doesn't magically become their money. They'll be expected to spend it on employee salaries, and employees are much, much more expensive than anyone who doesn't have employees thinks they are.) I wouldn't get too jealous of their lot in life, because it will cloud your judgment.

Is it just guys that have too much money and fund startups hoping that 1 in 100 of the funded ones will eventually make them billionaires?

Again, you're letting sour grapes color your perceptions here. Broadly speaking: "Make lots of bets, lose lots of bets, but have some money invested in [without loss of generality: Google]" is, in broad strokes, the model. Note that there is no reward for being original. Google wasn't. ("Another search engine? Please. And their portal is much worse than Yahoo's.") Facebook wasn't. ("So it's like MySpace but with 1/1,000th the users? Great idea, Harvard dropout.") etc, etc.

In terms of what makes a startup fundable: http://venturehacks.com/articles/unfundable-startup

In general, with exceptions which would be pretty obvious to a hypothetical founder if they applied, a hypothetical founder is fundable if:

+ They are located in proximity to investors who routinely fund companies like theirs

+ They are addressing a market with potential to make $10M ~ $100M (seed stage, angels, and early VC funding) to $X00M a year in revenues, at a minimum.

+ They've got a team who "look like winners", for very subjective versions of that. Graduated from a good school, worked for one of a few firms with known high hiring bars (AmaGooBookSoft, etc), had a high-impact role at a previously successful startup (first hire or first VP engineering at a company which exited or is a shoe-in to do so, etc), etc etc.

+ They are clearly capable of shipping great product. What makes a great product? Um, investors "know it when they see it", but suffice it to say that high-caliber design is very big right now.

+ Traction. In brass tacks: $X0,000 of monthly recurring revenue or millions to tens of millions of free users but growing fast. Less at early seed stage, but you should ideally be able to demonstrate it in micro-scale. (e.g. If you can show $1,000 of ad spend got you 4 customers and their LTV is probabalistically above $1,000 then you're in a much better position than if you can't, even if $4,000 doesn't really ring any bells for investors.)

Now, let's contrast this to a hypothetical guy. Guy has big dreams. Guy probably has not shipped a product. If Guy has shipped a product, Guy got 20 people to look at it once, but no one still uses it. Guy lives in the Midwest. Guy graduated from a respectable (but not name-brand) school. Guy worked has worked the last few years as a freelancer. Guy has not convinced a second guy to join him on his crazy adventure. Guy has an idea which Guy thinks is awesome but which Guy has not succeeded in actually selling to 10 customers or instantiating on the desktops or home screens of several thousand users.

Guy will have a very, very difficult time raising funding.