Startups in the US have a more difficult road ahead, with venture capitalist spending dropping by half in the second quarter of 2023.

According to research by PitchBook, via Bloomberg, VCs are tightening the purse strings in 2023 amid a slowing economy. In fact, the 3,011 startups funded last quarter represent a third less than the same period in 2022.

Similarly, the $39.8 billion VCs spent is roughly half of what they spent in the year-ago quarter. As Bloomberg points out, when accounting for the fact that $6.5 billion of that funding went to Stripe — a relatively safe bet for VCs — the overall funding picture looks even worse.

Early stage startups are being especially hard hit, with angel and seed investment seeing the biggest pullback.

Investor priorities have also changed, with a greater emphasis on profitability rather than growth at all cost.

“Investors are looking at that saying, ‘That’s not what I want to invest in,’” said PitchBook analyst Kyle Stanford. “They’re saying, ‘I want to invest in a company that has some semblance of a path to profitability.”

Moving forward, it’s clear that startup will need to up their game if they want to receive funding.