Sure. It's damn cool that you can create your wonderful product at a cost of only $1000. But should you reveal the truth to the VC? Or should you lie to them that it cost $50,000? The reason is if you tell the truth, the VC might think since your cost is so low, the valuation of the company they'll give would be low too

I'm using the same logic as a buyer knowing the cost of a supplier. If you were told the goods cost $1, the likelihood of you bidding $100 is lower than if you were told the goods cost $80.