Young startups are struggling as the tech industry celebrates another record-breaking quarter

It has been yet another record-breaking quarter for the tech industry.

Valuations for venture-backed companies doubled over last year to an average of $100 million, the highest in more than a decade, according to Pitchbook, a private financial-market data provider. Total venture dollars invested are on track to hit $74 billion in 2016, second only to 2015 over the past decade. And venture capitalists are basking in their best year since at least 2006, expected to end the year with $32.4 billion after raising $9 billion in the third quarter.

None of that may cheer up new startups that can’t raise money. This is the fifth-straight quarter that the total number of venture deals has declined, falling 32% from the quarter prior. The total amount invested may be one of the top years on record, but investors appear to be pouring most of their capital into late-stage deals (Series D and beyond). Meanwhile, the number of seed-stage deals dropped from 1,029 last quarter to 898, about half of its 2014 peak.

“Investors have looked to utilize a more targeted approach to how they invest…making fewer but larger bets,” said Pitchbook. Indeed, private equity, venture capitalists, and strategic corporate investors are still writing big checks. The average round size for late-stage companies this quarter was $10 million, the highest since 2005. This year has also seen a few billion-dollar rounds, including Snapchat, Uber, and Didi Chuxing.

Investors wary of the last few years’ exuberance are raising their bar for new investments. Founders say VCs are placing new emphasis on revenue, profitability, and stellar growth numbers to justify new investments. The halcyon days of nabbing millions from a well-timed pitch appear to be ending for now, with even some well-established startups, such as Postmates, having a rough time of it. Still, there are high-flyers like Snapchat that are in the position of deciding whose money to take.

As investors look to buy growth amid an macroeconomic malaise, startups are also securing big exits. Public markets have rediscovered their affinity for technology companies this year—almost every tech stock that debuted in 2016 is outperforming its IPO price—but most acquisitions are still happening in private, says Pitchbook. More than 90% of of venture-backed exits this year were acquisitions and buyouts, including deals valued at $1 billion or more for Jet and Dollar Shave Club.

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