SAN FRANCISCO--At the end of July, Homejoy, a start-up company that used the Web to offer house cleaning, hung up its mops, leaving customers in the lurch and Google Ventures and other top-tier private equity backers out the more than $35 million they had sunk into the company.
Now, with public markets on a see-saw and venture capitalists thinking the turmoil may hit private markets, many investors are wondering if more Homejoys lie ahead. That is leading them to look extra hard at companies that hold similar characteristics to Homejoy: on-demand, logistics-heavy businesses that cater to consumers rather than businesses.
"They are caught on a treadmill" because to keep running requires more cash infusions, though often without an accompanying move to profitability, said Venky Ganesan, a venture capitalist at Menlo Ventures. He said he looked at about a half dozen such companies in the spring and early summer, passing on all of them, only to see all raise money elsewhere.
While the failure of one start-up might not seem like much, Homejoy's folding attracted outsized interest because it had already raised more than $35 million from high-caliber firms. Most start-ups fail, of course, but they generally do it at earlier stages and lower cost to their backers.
Homejoy is one of at least four high-profile collapses or retrenchments so far in 2015, counting those that raised at least as much cash, also from top firms. In recent years, among consumer-oriented tech companies, just one or two such start-ups have failed each year.
Earlier in 2015, assets of two one-time highflyers, social network Path and online retailer Fab, sold for a fraction of the money invested in them. In the world of venture, such sales are how most start-ups fail.
And in July, upscale grocery delivery service Good Eggs closed all locations except San Francisco, after raising more than $50 million from backers including Sequoia Capital.
Still, venture capitalists say they don't expect an implosion in the startup industry given that many high-growth, no-profits companies have recently raised enough money to give them a cushion thick enough for months, if not years.
"It may not be a 10 percent correction overnight," said Roger Lee, general partner at Battery Ventures, describing one scenario for the valuations of those companies. "It may be a long steady correction over time."