Balanced
The business, the turning points, and the decisions behind them.
01 / WHAT IT BUILT
What the company did
Balanced developed online payment services.
02 / Balanced FAILURE REASONS
Failure reasons
Balanced failed because it could not grow fast enough to survive as an independent payments company. Co-founder Matin Tamizi said the company never reached 'the escape velocity necessary to be a large, innovative, independent player in the payments space.' The product itself was strong and developer-friendly, processing over $370 million in payments annually for about 320 marketplace customers - but the company had raised only $3.4 million while rival Stripe had $190 million in venture funding and was launching Stripe Connect to serve the same marketplace niche natively. Outgunned on capital, headcount and merchant base in a market crowded with Stripe, Braintree, WePay, Dwolla, Amazon Payments and PayPal, Balanced chose to wind down gracefully rather than burn its remaining cash on a desperate pivot.
03 / EVENT HISTORY
Events in the structured record
- Founded and Y Combinator
Balanced was founded as a payments platform for peer-to-peer marketplace businesses and joined Y Combinator's Winter 2011 batch, building an API that let marketplaces hold funds in escrow and pay out sellers.
- Closure announced
On March 13, 2015 the company announced it was closing its payment platform, striking a transition deal with rival Stripe to migrate its roughly 320 customers - including Tilt, RedditGifts, Tradesy, Relay Rides and Artsy - with the API and dashboard to shut down on June 11, 2015.
- Shutdown completed
The Balanced API and dashboard shut down on June 11, 2015; a small team stayed on until October 9, 2015 to support refunds, transaction inquiries and chargebacks.
04 / CONTEMPORARY REBUILD ASSESSMENT
Difficulty of rebuilding this project today
Material for this section is being gathered and checked. It will appear here once ready.
Overall assessment: Not completed
05 / CAUSAL CHAIN
How the factors connect
- 01
The company had raised $3.4 million in venture funding - far less than the $190 million its chief rival Stripe had raised.
- 02
On March 13, 2015 Balanced announced the closure; its API and dashboard shut down on June 11, 2015.
- 03
A transition deal with Stripe - not an acquisition, with no financial terms disclosed - moved customers over, with Stripe honoring Balanced's existing pricing agreements and migrating card, bank account and seller identity data.
- 04
A small team remained for nine months until October 9, 2015 to issue refunds, query transactions and fight chargebacks; no loss figure with a stated subject, period and accounting basis has been publicly documented.