This post is great. Having been through YC and TechStars (separate companies) and founding a crowdinvesting platform, it seems to me that early stage investing is very much about who you are and the relationships you've built. You can raise money and survive without significant traction a priori.
What's interesting to me is how the barrier for investing is being lowered (e.g. JOBS act) and how that's going to impact the dynamic of raising money. Startups are going to be able to find people in their industry who grok what they're doing (e.g. their customers) and raise small amounts of money from many people. It's going to be easier for investors to make more small bets ($1k instead of $50k), so I think the need for obvious traction early on (graphs going "up and to the right") is going to keep decreasing and it's going to be more about speaking to a niche of investors in your space and being great with product and communication.
