The article in The Verge and Andrew's post[0] do a good job of explaining that
With the amount of money they had raised, the expectation from investors was that their flywheel would already be setup and working and new funding would accelerate it (Series A being the new Series B).
Media coverage of startups is all at the pointy end - companies that have raised money and are successful, most startups don't raise continuing rounds and the "Series A crunch" is real. The question should be inverted, why should Everpix get funded.
Despite having a product that was loved, was free, had good word of mouth and coverage etc. they still didn't get funded. Not a unique or unusual situation, and only covered in this case (as opposed to the startups that die out quietly) since the founder was willing to speak to a journalist about it.
Could it have worked with no funding, a leaner startup and as a paid product? Who knows, but I wouldn't use their freemium numbers to make that case.
I think it was covered so widely because everpix did a great job on pr and getting the story out there. I assume the story will help with either generating more offers for investment, sale, or employment for the team.
Isn't image hosting a horribly crowded space, completely filled with big hitters? It seems like they just weren't close to competing in scale with the likes of flickr, imgur, or instagram. It just seems like there isn't room for another small image host unless they're showing serious potential to be one of the big ones. Instead of being an image host, they could have stayed leaner by being a hub for other image services, but that also would probably be less interesting to investors because they'd just be latching off other image spaces.
