I'm having the same problem on a raspberry pi 1b with the newest version of Stretch lite. Installed the latest available version of raspbian Jessie lite http://downloads.raspberrypi.o…raspbian_lite-2017-07-05/
This seems to work but it stops working again after I update the system with apt-get update/upgrade. It only works with a non up-to-date install of Jessie.
When running stretch the hyperion service is running after startup but the LEDs don't turn on until the service is restarted.
I'm happy to provide more information if needed.