Because the HTL process operates in a high-pressure hot water environment, typically 40 - 220 bar-g (so it's not supercritical water) at 250-370°C. Since the process requires water (which is why it's called hydrothermal), the biomass feedstock do not require any drying, which is a very energy intensive process.
When you pyrolyze or liquefy wet biomass, the water in this wet biomass will be converted into steam that acts as an inerting environment that is necessary during the partial thermal decomposition process. If, however, you start with dry biomass, you will then need to add inject water (or steam) into the hydrothermal liquefaction (i.e., pyrolysis) process.
I try to give a more "marketable explanation". Hydrothermal liquefaction, as well as hydrothermal carbonisation processes operate under pressure 20-40 bar. Therefore, these plants have higher material and construction costs. The economic benefits of the hydrothermal treatment is that it avoids the biomass drying process, reducing the energy consumption and the whole plant operational costs! Therefore, it doesn't make sense to use dry biomass in hydrothemal plants.
Since hydrothermal liquefaction is a process that involves hot water, drying the biomass would amount to waste of energy. Also, the use of wet biomass will enhance the process as compare to dry biomass that will need the water to go into the pores of the biomass meanwhile for wet biomass, the moisture is already in the biomass, and it can just be heated up immediately during the process. So I'll suggest you can wet the biomass to enhance your HTL process
It is quite common to dry the biomass content to measure the concentration of biomass fragments in each hydrothermal process, especially in the lab scale investigation. Therefore you are in the right direction if the biomass/water is one of the operational variables you want to optimize. Otherwise, vaporization of water between the cells of biomass and bounded water molecules would be highly energy demanding and unnecessary.