You got it right: VCs are not interested in that 250k investment, and you forgot the time component - they want that 10x over a relatively short period (<5-10 years) that the small business is unlikely to achieve. Plus there is nobody to sell to if it’s not a growth stock, publicly traded, and no incentive to buy back the shares. The company will be pushed harder and to invest in growth strategies that make it not-a-lifestyle-business anymore, i.e. a startup.

You cannot have it both ways, and why would you even need a huge lump of cash for a business that is already sustainable? Traditional loans are a much safer source of funding for that.