I think this depends on whether you're looking at funding from a business-centric or founder-centric perspective. The business-centric contention is that you should only seek funding once you have a business idea that all your analyses show would be immensely profitable except for your company's lack of money, since otherwise you're adding unnecessary risk.

Founder-centric organizations like Y Combinator (I've never been funded by Y Combinator so please correct me if I'm wrong with this assessment) seem to have different dynamics and motivations. Instead of investing in the business, they invest in the people much like a college -- realize they are going to screw up from their inexperience, but give them angel-level amounts of money, latitude to pivot, and world-class networking opportunities and help.