It's worse than that, IMO: Homejoy was effectively a leadgen middle-man. Homejoy was itself relying on other lead generators, namely Groupon. I think if they had been doing better lead generation themselves they might have had a better chance of getting more rounds of investment. When you aren't doing good lead generation and aren't providing good value to your customers/contractors, what is really left to invest in?

This doesn't change what you said; they may still have had a viable business if they had been structured for a one-time transaction.