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U.S. venture capitalists are returning back to rational dealmaking, according to what analysts say about new investment data from Q1 of this year.

The latest PitchBook-NVCA Venture Monitor report published on Wednesday shows just 1,797 startups receiving venture funding during Q1 of this year — the lowest number of companies since 2011.

But PitchBook CEO John Gabbert said this signifies a return to normal investing activity, versus an overall slowdown. He said the industry is “finally coming back down to earth.”

“It’s easy to look at the numbers and assume the industry is starting to lose its footing, but we don’t think that’s the case,” Gabbert said in a statement. “We see this as investors and entrepreneurs returning to a more disciplined approach to investing. Both parties are having to exercise more caution in the market and conduct the necessary due diligence to pencil out fair deals on both sides.”

Venture firms deployed $16.5 billion to startups in Q1, which is slightly up from the previous quarter but down from $18.7 billion in Q1 2016. They also raised $7.9 billion across 58 funds, which is down 24 percent year-over-year but still gives firms ample cash to invest in the coming months ahead.

“After seeing large pools of capital raised in recent quarters, venture investors will continue to have dry powder to deploy to the entrepreneurial ecosystem, albeit with a more disciplined approach,” NVCA CEO Bobby Franklin said in a statement. “Combined with a positive outlook for a strengthening IPO environment for venture-backed companies, there is much to be optimistic about in 2017.”

The report also noted how Trump Administration policies, like those related to visa processes, have “already caused ripple effects on the entrepreneurial ecosystem.”

“Recent developments from the Trump Administration and uncertainty stemming from future unknowns remain an X-factor in both the short-and medium-term for venture investors,” the report reads. “However, venture capital is about the long game, and investors and startups remain focused on building the next generation of innovative companies to lead the American economy.”

Here’s more analysis from the report, which you can read here:

“Though it is difficult to assess how the year will shake out after just the first three months, based on the trend line, the industry is likely reverting to 2012-2013 levels of investment after peaking during the past few years. This is not representative of a fundamental decline of venture investment into innovative startups, but rather a return to a more disciplined approach with a much more critical eye on investment opportunities. With venture-backed companies staying private longer and first-time financings continuing to decrease, venture investors are focusing more of their efforts on supporting existing portfolio companies.”

Seattle VC activity

The Bay Area (San Francisco-Oakland-Fremont, and San Jose-Sunnyvale-Santa Clara) led the way regionally with investors pouring in $6.7 billion across 386 total deals.

The Seattle-area ranked sixth overall with 68 deals and $300 million deployed during Q1; the $300 million is up 33 percent from last year, but down from $544 million in Q4 2016. Seattle companies had the highest median post-valuation ($55 million) of the top regions.

Here are the top deals from the Seattle area during Q1:

Here’s a look at VC deal flow activity in the Seattle area over the past several years:

‘Soma’ Somasegar, a managing director at Madrona Venture Group, told GeekWire that he’s bullish about the Seattle startup scene given what he’s hearing from entrepreneurs and folks from the Valley.

“All indications are that Seattle is becoming an even more vibrant place for startups,” he said.

Somasegar added that out-of-town venture capital firms are continuing to show interest in the Seattle region.

“We see an increased amount of focus and enthusiasm from them,” he said. “They want to understand the market and then hopefully participate.”

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