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Venture capital investment declined for the fifth-straight quarter as investors set higher benchmarks for their funding decisions.

That’s one takeaway from a new “Venture Monitor” quarterly report from Seattle-based Pitchbook and the National Venture Capital Association.

The third quarter of 2016 marked the fifth straight quarterly decline in the number of companies receiving venture investment, and a 32 percent quarter-over-quarter decline.

There were more than 2,000 investors that poured close to $15 billion in venture financing to more than 1,600 companies during Q3. It was the lowest number recorded since 4Q 2010.

Despite the quarterly dip, annual total venture investment is already up to $56 billion in 2016 — on track to be the second-highest amount of capital invested ever, behind $78.9 billion in 2015.

“Despite the decline in overall VC deal flow, promising companies like Moderna Therapeutics, Zoox and OfferUp have demonstrated that quality targets are having no trouble closing sizable financing rounds,” PitchBook CEO John Gabbert said in a statement. “As investors set higher benchmarks for the companies they choose to fund, those that are able to build a defensible business and prove their value in the market are still able to secure the funding needed to grow their operations.”

Pitchbook also noted $32.4 billion raised via 201 venture funds so far in 2016, which is on pace to be an annual record.

The study found that almost every tech IPO in 2016 is performing above its offering price. But IPOs are also down from years past, as 91 percent of total venture exit activity came from strategic acquisitions and buyouts.

Another data point: the median venture-backed exit size for these types of exits was $100 million in 2016, the highest figure on record and double the amount recorded for 2015.

“While venture investment activity is moderating a bit, venture investors remain very active supporting the growth of great companies that will define the future of our economy,” Bobby Franklin, CEO of NVCA, said in a statement. “This track record of success is fueling the recent surge in fundraising as limited partners seek out new entry points to get in on the ground floor of innovation and serves as an important validation of the critical role venture plays in driving new company formation. With the recent tech IPOs of Twilio and Nutanix showing positive signs, we are hopeful the IPO market is beginning to thaw so that limited partners can redeploy that capital and sustain this positive fundraising momentum.”

Update: Pitchbook provided data for VC deals in Washington. Total deal flow reached $511 million over 78 deals for Q3, up from $327 million over 75 deals in Q2, but down slightly from $535.5 million over 88 deals in Q3 of last year.

Click to enlarge. Via Pitchbook.
Click to enlarge. Via Pitchbook.
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