As long as the timing of the failure does not impact the potiental for success, why would you not want to fail sooner than later?
There are two ways of thinking about a problem. And they both are important:
1) Why wouldn't this work? 2) How can we make it work?
When you get funding, it's mostly about 1 and not so much about 2.
I am not sure that Instagram would have survived receiving funding.
https://backchannel.com/why-instagram-worked-45dbfeaa37c8#.1...
Another aspect of it that I don't really want to go into right now... when an outsider looks at your company, they don't really understand what's going on. But they do have a bunch of rules of thumb that they like. They may or may not apply to your company. But in their minds, you're a bad company if you do not adhere to them.
VCs admit to thinking this way. They call it "pattern matching."
Some modification to my earlier statement is accurate. :-) Unfortunately, I don't have time right now to iterate on it. If you're interested, you'll have to discover it yourself.