After a euphoric year of record fundraising, tech startups are now caught between rising prices, less funding and an imminent recession, writes AFP.

“We’re back on the ground,” says Charlie O’Donnell, founder of investment firm Brooklyn Bridge Ventures, after a “harvest 2021” that “got investors excited.”

According to CB Insights, about $311 billion was raised last year by venture capital firms—those that invest in high-growth startups—more than double the amount raised in 2020, already a record year.

“There are a lot of external factors affecting the market,” said Sunita Patel, head of business development at Silicon Valley Bank, citing rising interest rates, the geopolitical environment and weak financial markets.

Back in May of last year, the investment consulting company Y Combinator warned startups looking for short-term funding: “The chances of success are extremely low, even if your company is doing well. We recommend changing plans” and waiting.

As a result of this deteriorating climate, “we’re seeing valuations melt away,” especially those close to going public, Sunita Patel says.

Grocery delivery platform Instacart is now valued at $13 billion, up from $39 billion in March 2021, according to multiple media reports.

As for flagship self-driving software Mobileye, it went from $50 billion to $17 billion between December last year and its Wall Street listing last month.

However, the situation is nowhere near as alarming as it was in 2000 or even 2008, two dark periods in the development of technology after the advent of the Internet.

Not all of the money raised in 2020 has been invested yet, “so there’s still a lot of capital available for companies in this sector,” says Sunita Patel.