Turn the heat on the pot to medium and add the mushrooms. Cook for 5–7 minutes until they begin to release their liquid. Add the extra virgin olive oil and the red onion. Cook, turning often, until the mushrooms deepen in color and the onion softens, about 7–9 minutes.
Add the garlic, a pinch of sugar, and a pinch of crushed red pepper to the pot. Cook for 1 minute until fragrant.
Pour in the crushed tomatoes and balsamic vinegar and bring to a boil. Reduce heat to medium-low and simmer the sauce rapidly for 10–15 minutes. If the sauce begins to stick or evaporates too quickly, add a splash of water and reduce the heat to low. Taste and add salt, pepper, sugar, or crushed red pepper to taste.