No VC invests 100 million in an early start-up. Most of the start-ups around that pull in $100 millions in investment are 3 - 5 years old, think of Tumblr, Supercell, Survey Moneky. The ones who invest 100 million+ or mostly late stage investors and are obviously given a smaller % in the company than the VC was given for his investment. Most of the time the late stage investors also buy-out the VC's and buy their shares in the company. Instagram had a few VC's who pulled in a few million and they obviously made a killing when Instagram sold for a billion. But that are rare cases.
Most start-ups will blatantly fail - look at Foursquare. It's a pile of shit but their CEO never realized it and even put down a $30 million buy-out from Yahoo...
Snapchat or Whatsapp have also received millions in investments but they will never IPO because they are simply one platform, and how on earth will Snpachat make money? People hate distracting ads while chatting.
If you hear about an app in the tech news it's mostly always too late as the app has already received significant traction to be covered in the news (except if they paid for a PR). Most VC's get approached by the owners of apps/websites, they present them their idea and work around the WHY. Why is my app kick-ass. Why will millions of people use it? And most importantly, why will I offer you a great return for your investment?
If you are good at story telling, you will have no problem getting a VC.
I watched this video a few years ago. Quite interesting.
http://www.ted.com/talks/david_s_rose_on_pitching_to_vcs.html
So to add to OP, investors make money money by:
a) Selling the company to another company (Instagram to Facebook, that 17 year old kids app to Yahoo, etc.)
b) By going public (Facebook, Google, ...)
Or if they are dumb VC's, they lose most of their money. It's a game. The higher the risk, the higher the return, or the higher the fall. Win all, or lose all.
