"But even then, our lack of traction is what set the scene for that dumb decision."

But that's exactly what may be the problem with VCs. Sometimes you'd have to go through a dozen of ideas before you find one works. If you're frugal enough and can keep the company afloat for a few years, you're likely to succeed in the end.

But VCs may push the company to burn all cash in the next 4 months pursuing the idea #2. And if it doesn't work - you're down and out.

Very few businesses have the very first idea paying off handsomely. This may make VC's capital a very high-risk proposition: you either hit the jackpot with your first idea or you end up with nothing.