San Francisco’s Shuddle, a pioneering ride service for kids, is going out of business this week after it failed to raise more venture backing.

“We ran out of money,” said CEO Doug Aley, 37, who took the reins in November from founder Nick Allen. “This is a capital-intensive business, from driver recruitment to customer acquisition.”

Shuddle had raised $12.2 million, including $9.6 million a year ago. That last infusion, originally tabbed for expansion outside the Bay Area, instead has fueled its operations for the past year, Aley said. Shuddle lost money on every ride until this year, when it started making money on individual rides.

The 32-person company sought unsuccessfully to raise an additional $10 million to $15 million “to pull us through to profitability,” he said.

Venture capital tight

The news underscores how tight venture capital has become, especially for younger startups that haven’t grown quickly enough. The on-demand sector, once a darling of investors, is particularly challenging for fundraising, Aley said.

“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.

The recent fates of two San Francisco on-demand valet parking services demonstrate the market’s fickle nature. Zirx, which had raised $36 million, shut its consumer service in February, choosing to sell parking and other services to companies. But rival Luxe in April scored $50 million, led by car-rental company Hertz, in a deal that values it at more than $100 million before the investment.

Often dubbed an “Uber for kids,” Shuddle began in fall 2014 as the first service offering on-demand paid rides for unaccompanied children (and some seniors) provided by drivers in their personal cars. Its 350 independent-contractor drivers are almost exclusively women, many of them teachers or child care providers.

Shuddle has given some 65,000 rides throughout the Bay Area, with an emphasis on the East Bay, and was up to 7,000 rides a month. It had about 2,600 customers, with about half of them booking more than four rides a month, Aley said.

A useful service

“The service is needed,” Aley said. “Parents tell us over and over again that we are heroes and saved their marriages, stuff like that.”

Shuddle’s rides were more expensive than those of Uber and Lyft, as it had higher expenses for more-extensive driver background checks and additional insurance. Trips averaged about $24 each, with a quarter of that going to the company and the rest to the driver.

Several other services offer rides for unaccompanied kids. The most developed is Los Angeles’ HopSkipDrive with more than $14 million in venture backing and plans to expand outside Southern California. San Mateo’s Zum and San Francisco’s Kango, more-recent startups with seed funding, offer services in the Bay Area.

Drivers, riders needed

All the kid shuttles suffer from the chicken-and-egg syndrome of needing more drivers and more riders so they can better balance supply and demand, according to venture capitalist Mike Walsh, an early investor in Uber who also invested in Kango’s seed round, speaking in January.

“I’m hopeful that the companies that remain in the space will stick around and continue to do great work,” Aley said.

The original ride-hailing company, San Francisco’s Sidecar, shut down its ride and delivery service in December after being outgunned by bigger, better-funded Lyft and Uber. Shuddle founder Allen had co-founded Sidecar and served as its chief financial officer and head of operations. In January, General Motors bought Sidecar’s technology and hired about 20 of its former employees as part of its push into new-vehicle technology.

Aley said Shuddle likewise will hope to sell some of its intellectual property.

“We kept our focus on safe and reliable rides for families,” he said. “It was an honor to be trusted with that responsibility.”

Carolyn Said is a San Francisco Chronicle staff writer. Email: csaid@sfchronicle.com Twitter: @csaid