Vacuum optimised rockets require a vacuum. Balloons require atmosphere… so there is a gap where the balloon can’t go higher and the engine isn’t in vacuum yet

Combine balloons with skyhooks. https://www.youtube.com/watch?v=dqwpQarrDwk

Edit:

According to proprietary imtringued numbers the hydrogen for a balloon capable of lifting 1kg to 50km would be $800 if you do not reuse the hydrogen. The skyhook would accept vehicles at an altitude of 100km so no, keep balloons out of the space launch industry.

Thin-atmosphere-optimized is a thing, and lets you get most of the benefits.

Rockets use stages partially to solve this problem, also to deal with rocket equation issues.

So already a solved problem

1. Stages

2. Adaptive rocket nozzles are a thing.