[q2]

Compared to stripe[0], balanced[1] took very less funding as per the data. Reading from the comments here, their service seems to be liked by users.

In that case, may be they should have looked into funding aspect rather than shutting down and funding might have helped them to become large,independent player as they wished.

Since YC backed, funding should not have been much difficult either. So it is surprising,seeing from outside. Am I missing anything here?

[0] https://angel.co/stripe [1] https://angel.co/balanced

[patio11]

So let's not make this story about Balanced, but let me spin you a yarn of a totally hypothetical company named FooCorp, which has a plan to disrupt a sclerotic two-sided marketplace.

FooCorp has a team of talented product people working for it. They've got a gleam in their eye and a story on how they're going to attack a ridiculously large market. FooCorp easily sails to an angel round sized in the high six or low seven figures based on this.

FooCorp then hires, say, a half-dozen engineers to help their founders build things out. These engineers have AmaGooBookSoft pedigrees and cost $8k apiece... every two weeks.

FooCorp's product is quite beloved by early users. They accelerate hiring and marketing. Things are going swimmingly.

The founders of FooCorp, having the best of advice from mentors and friends, start trying to put together an A round, which will be millions or tens of millions of dollars raised from professional investors.

"People love us."

"How many?"

"... Well, a growing number."

"What's the monthly growth rate."

"We've got a wonderful graph."

"Kid, I'm a professional at this and have heard every possible dodge. Give me numbers. What's your marketplace volume?"

"Millions."

"NOT A RESPONSIVE ANSWER."

"... Two million."

"Per what?"

"... Total."

"Cool. OK, I think we have what we need here. Keep us apprised of your progress. We really like you and the team." which is VC for "We will not invest but if you want to give us a free no-obligation option on investing because you're new at this then we'll take it."

Seed is raised on the dream. A rounds are raised on the metrics. If you don't have the metrics, you don't raise an A round. If you've hired in the expectation of an A round, and you don't either hit profitability before your money runs out or hit metrics which justify an A round, your company unceremoniously dies. This is by far the most common outcome.

This is sort of the talk-of-town right now, generally phrased as "Series A Crunch."

[q2]

>>> Seed is raised on the dream. A rounds are raised on the metrics. If you don't have the metrics, you don't raise an A round....

These are golden words which all budding entrepreneurs need to remember rather than getting carried away by seed funding/hype. Thanks.

[tim333]

I guess it may have been too late in the end to get further funding but it they had raised something like Stripe's $100m rather than their $1.55m things could have been different. Not sure what this says about startup strategy - maybe bootstrap if you can but if you raise, raise big?

[bsdpython]

Wow I am shocked to see how little money Balanced raised. Considering their pedigree and name recognition I would have expected a lot more. They must have either not been interested in raising funds or had really bad financials that scared off any Series A prospects. Hopefully we get some kind of post-mortem once the dust has settled.