Absolutely. No matter what you do while you're out there scouting for funding and applying to places like YC, your work on your product is top priority.

Hope for the best, plan for the worst, even if you don't get funding you might find yourself with a winner, and your chances of finding funding go up with every hour you put in to your product.

Nothing better than being able to show your product in use by actual customers and a nice start of a growth curve.

It also gives you some real world numbers that you can plug in to your business plan.