Which is great for companies aiming to stay small and self-bootstrapped. There's nothing wrong with this model for founders who want to stay independent.
The VC alternative allows companies to grow faster than organic revenue growth might allow. It can take a long time for a 10-person company with $2mm ARR to grow to $2.2mm ARR so they can hire the next person they need. Alternatively, they can take VC money and hire the next 100 people they need without waiting for revenue to get there first.
One model isn't inherently better than the other. The important thing is for founders to decide which type of company they want to be and stick to it. A founder who wants to grow organically is going to have a bad time if they take money from investors who want growth. A founder who wants to grow as fast as possible is going to have a bad time if they're constantly stuck waiting for organic growth to let them make the next hire.