Even though this narrative is hugely removed from the realities of startup life (most college startups go nowhere, the most successful founders tend to be in their middle age with significant financial stability, etc), it is still romanticized by founders and startup employees and other people who really should know better. So then why do they buy it?
To get people to work harder for you. Spending every waking moment in front of a customer or a computer screen eating bulk ramen sounds like a great montage scene in the movie you'll have an EP credit in, and this distorted reality is even easier to sell to impressionable young college grads who have maybe .1% of the equity (in options!) that founders and VCs get to keep.
Why are jeans and hoodies the fashion choice of founders? Because if everyone is used to dressing like a poor college student, they tend not to notice how little they're truly being compensated.
This isn't some big founder/VC conspiracy, it's complicit common sense.
I can imagine someone semi-consciously optimizing their life in such a way as to avoid middle class normality as much as possible. If you want to get financially independent without doing "boring" stuff like working a stable career and investing in index funds, the notion of a wildly successful startup is perfect: you get to be interestingly poor for years, and then you can suddenly get fuck-off rich, with no intermediate period of dull stability.
Presumably after that you can go off and build canoes with your friends or whatever it is you "really" want to do. Except that probably, for reasons David and others outline, the plan will fail and drag you into decades of pure hypocritical misery.
Because they're comfortable, familiar, and they can get away with it? I think it takes a particularly cynical and angry mind to stretch the choice of clothing to be a tool of oppression on the part of the founders.
It's the same as buying a few pizzas for your employees to get them to code till sunrise instead of paying them proper overtime. Impressionable college grads with little work experience elsewhere will take that kind of behavior for granted, and assume it is the cost of their (measly) equity. Essentially, you want them to be suckers. Comfortable suckers.
Most of these guys telling you what to do, where to live and which technologies or schools that matter are Ivy League alumni multimillionaires. Many from a time before a widespread Internet and grants for poor students. When was the last time you saw any of them sit down with someone who were really challenging their views?
Edit: For somewhat of an example of the last thing there are two episodes of This Week In Startups with DHH.
Additionally, after work most of my friends have to change outfits to participate in social events. Business casual dress is useless, now I wear jeans, athletic shorts, and t-shirts to the office.