Having a good working product is definitely important, for one it brings more trust towards the project itself. Members will feel more comfortable with investing in a project that has an physical product. If a working product is not available, then a prototype or a demo is needed that will show how the actual product will work.
It's very big advantage if there is already a working product introduced by the team its invites more investors and followers and it's easy to convince more people for support, you can also recognized the effort of the team behind the project it's a big step ahead in everything.