Mercurial was slow, right when it mattered, and didn't have the Linux kernel using it. GitHub's VC funding helped, for sure, but that had more to do with the rise of GitHub over Gitlab, SourceForge, Google Code, and BitBucket than the success of git itself. Getting people to switch RCSes has a bootstrapping problem that the Linux kernel solved for git. Firefox was on Mercurial/hg, as was CPython, but neither of those have the same ecosystem of developers.
if you take the time to learn it, the underlying data model for git makes sense, leading to the tools making sense, for those that put in the time investment to understand the underlying data model. This meant that there was a bunch of git expertise floating around IRC and mailing lists. Git tooling also wasn't super opinionated, letting pre-git workflows be run on git with little modification (which is also its problem, but does drive adoption). Sure, a recommended workflow has emerged, but that came later. By the time GitHub started in 2008, that was three years after its invention and use on the Linux kernel and git already had the mindshare and intertia. Without VC funding, GitLab or BitBucket or even Google Code might be the dominant platform, but it really was git's speed and fast branching, and proven scalability from managing Linux kernel development that led to git's rise as the preferred solution. (Its inability to handle monorepos like Google/Meta wasn't an issue for that time.)
Mercurial's lack of speed and inflexibility are what hurt adoption. VC money pouring in might have saved it, by somehow addressing those two issues, but unfortunately we'll never know. Mercurial's workflow is pretty central though so I doubt its community would have supported changes to the central workflow. Moving from Subversion to a DVCS (aka mercurial/hg or git) required learning a new tool and being forced to change workflow on top of that made the decision to go with git easier since a git expert could make a company-specific cheat sheet that didn't also require learning and adapting to a new way of working at the same time.
Most of the world was on SVN by the time git came around, and Git-svn was a pretty popular adapter. You could use git and its fast local branching before the company turned to git. I really can't stress the fast local branching enough as a reason for git winning. SVN server-side branches took forever to be created (even with the underlying data not actually being copied) and I remember even just running "hg" and no arguments being slow.
VC funding helped GitHub, but git still would have won out because hg didn't have a dev community to rival the Linux Kernel. Maybe Wikipedia/Wikimedia, but that's a much smaller codebase.