Moms who counted on Shuddle to provide safe rides for their kids should now begin looking for alternatives, because the San Francisco-based startup has shut down its shuttle services.

Shuddle Inc., founded by Nick Allen in 2014, announced on April 14 that it is closing down its business on April 15 because it failed to source enough funds that could have helped the company to grow.

Competition

The shuttle startup was able to raise $12.2 million in venture capital when it started and an additional $9.6 million in 2015 intended for expansion. During its two years in operation, Shuddle could not make enough money to put its balance sheet on the green due to competition.

Shuddle's biggest rivals in the Bay Area market are Uber, Zum and DoLightful Inc., also known as Kango. HopSkipDrive Inc., which operates in Los Angeles, was also a stern competitor.

Some observers view the Shuddle shutdown was caused in part by the tightening of venture capital funding. Investors' interests have slowed down for on-demand services, especially younger startups that have not shown growth quickly enough.

The Fickle Behavior Of The On-Demand Services Market

The recent fates of several on-demand businesses show the market's fickle behavior.

Even with $36 million funding, on-demand valet parking provider Zirx ceased its consumer services in February and instead chose to sell parking to companies.

Ride services pioneer Sidecar ceased its ride and delivery service operations in December because it could not compete with bigger companies like Uber and Lyft. Sidecar later sold the its technology to General Motors in January.

Home cleaning business Homejoy, virtual assistant company Zirtual, and parking services Vatler and Carbon all closed their businesses recently.

For Shuddle as in other ride services, an increase in customer demand meant additional drivers, additional training, and additional funding. The company increased its price to an average of $24 per ride to continue operating profitably. This resulted in higher Shuddle prices than what its competitors offered, and thus, lost part of its market share.

The doom of similarly situated startups around him may have prompted Shuddle CEO Doug Aley to make the best decision for his company.

"My world has been colored by on-demand apocalypse headlines that littered the news over the past six to eight weeks when we were trying to raise rounds," he said. "I'm hopeful that the companies that remain in the space will stick around and continue to do great work," he added.