Granted, especially for business models with low initial revenue / high lock-in / winner-takes-all properties and for young founders without large assets, you are completely right that there's often a lack of other options.
That being said, other sources of funding than VC (debt, mezzanine capital, government grants, incentivized programs, early temporary monetization options or getting experienced execs as cofounders for real shares (not the usual .5 options)) instead of paying them hard cash with borrowed money later on are often totally overlooked by startups IMHO for their own detriment.
I think you guys are both right. And I'm sure one could construct some sort of venn diagram for startup funding with circles for equity, debt and bootstrapping; where a given startup is a good match for one or more funding choices (based on its biz model, industry, geography, founders, etc..).
(By the way congrats on financing your Series B with revenue, that is awesome!).
Just wanted to add one point in the equity vs debt debate is 'in theory' once a startup gets big enough doing the math on choosing equity or debt is very different. Once a startup is a real company and reasonably calculates how much money it needs and what it expects to earn on that money, an "optimal" capital structure calculation starts to emerge [1] and VCs and banks will compete for your business.
For a healthy, growing startup, if selling a certain % of your equity to a VC looks unattractive compared taking out a bank loan then your equity valuation is being mispriced here. Negotiate it. Conversely if a bank loan looks unattractive compared to VC equity offers (because the bank's convenants are too burdensome and your monthly interest/principal payments pull too much cash away from your growing business then the lender is mispricing your borrower risk). Negotiate it.
To follow on the Facebook example above, I believe they started mixing equity and debt almost immediately as early as 2004 [2]. Their seed investors backed their credit line (WTI invested $25k in equity and provided a $600k credit line). Later, FB took on $100M in debt from TriplePoint about the same take they sold .08% for $120M ($15B post). If you do the math here, then diluting ownership by .08% for $120M that you don't have to pay back vs. writing checks for $150M to pay back a loan over the next few years, the equity starts to look pretty attractive.
That being said, other sources of funding than VC (debt, mezzanine capital, government grants, incentivized programs, early temporary monetization options or getting experienced execs as cofounders for real shares (not the usual .5 options)) instead of paying them hard cash with borrowed money later on are often totally overlooked by startups IMHO for their own detriment.