As to the model, the question is does it fully factor in the risk level? The idea is lower the goalpost and manage the cash burn more carefully, to ultimately obtain a faster break-even and then ride growth through reinvesting profits, to some point in the future when you can actually start making distributions. The premise, possibly flawed, is that by not shooting for the stars you should be less likely the fail. They don't need to win as big each time, because they will win more often?
Businesses need capital to grow. It's that simple. $100k is a bare minimum startup fund for a sole founder for less than 6 months. It's not a serious amount of money. You can't expect that $100k to buy enough revenue to sustain full-time employees and also be paying out a meaningful dividend.
If the idea is to really, truly, avoid VCs and institutional investors.... I think you need to be able to seed about $2m. For example, structured as a Line of Credit, drawn over 48 months, but with warrants to convert into common stock at some ratio. The conversion ratio in the warrants adjusts to provide anti-dilution as needed.
That would provide a real amount of money for a 2-3 person team to potentially solve a real problem. And that would give the investors a meaningful percentage of the company and choice between a cash payoff or taking shares. That would be a really appealing alternative to VC funding which some strong founding teams might take notice.