Editor’s note: The latest venture capital report is out from the National Venture Capital Association and its partner PitchBook. And the second quarter figures show a continuing return to “normalization” after a surge from 2014 through early last year saw a near return to “dot com” era dealmaking.

“Through the first six months of the year, 3,876 companies received $37.76 billion in financing, setting a pace to near or surpass the $71 billion invested last year, and confirming that the industry has leveled off after peaking in 2015.,” the NVCA reports.

Here’s an executive summary overview of the report:

WASHINGTON, D.C. – US venture investment activity is firmly in the middle of a self-correction period.

Signs of this normalization began in the second half of 2016 after investment levels peaked between 2014 and early 2016. While on the surface this leveling off, particularly at the early stage, may give pause to some, those immersed in the industry on a day-to-day basis welcome this news as a healthy return to steadier investment after several years of froth. With valuations subsiding, the industry is witnessing a back-to-the-future moment to some degree as trendlines point toward a healthy venture ecosystem.

In the first half of 2017, 3,876 venture-backed companies raised $37.76 billion in funding, with $21.78 billion deployed to 1,958 companies in the second quarter alone. 2Q marked an uptick from 1Q totals in terms of capital raised, though the overall number of companies receiving investment remained relatively stable. The divergence stems from the high number of mega-financings that happened during the quarter. The top 10 deals alone accounted for $4.3 billion in deal value, representing 19.6% of total dollars invested during the quarter, and 34 financings were completed of at least $100 million.

While there have been fewer deals across all stages of investment, the decline has been the most acute at the angel and seed stage, which has also correlated to a drop in first-time funding rounds. Many venture investors are seeing this first-hand, as they report that most of the promising companies they have recently evaluated have been at the Series B, C, and D stages and fewer at the angel, seed, and Series A stages, likely an effect of the influx of companies at the early stage that received funding in 2015 and 2016.

Looking ahead, capital invested is unlikely to drop off given that venture funds have raised $130 billion since 2014. Investors are mindful of approaching the five-year window in which deploying capital is a priority given the venture fund life cycle. While overall 2017 venture fundraising is off pace slightly from 2016 in terms of closed vehicles, first-time fundraising has been a bright spot. 15 first-time funds have closed on a combined $1.5 billion, on pace for the highest annual capital raised in the past decade.

While investors balance deploying recently raised capital, their existing portfolio companies continue to grow and scale, and exit paths remain top of mind. After a slow start this year, the IPO market for venture-backed companies picked up steam in 2Q, bringing the 1H total to 27. There’s optimism of a strong year ahead for venture-backed IPO activity on the heels of five unicorn IPOs through 2Q and a strong pipeline of companies in the registration process, including real estate platform Redfin and security provider ForesScout, which has reportedly filed confidentially.

The performance of offerings has been mixed, notably with Cloudera’s IPO valued lower than its last private funding round, a move that other companies are closely monitoring to see the market’s reaction.

Against the backdrop of a vibrant venture ecosystem in 2017, policymakers have found themselves still adjusting to the new Trump Administration. Several public policy areas of interest for venture investors and their portfolio companies—many of which were topics of discussion at the NVCA Annual Meeting in May—continue to make headlines and face major hurdles in the coming months. Specifically, we are still waiting to see if the Trump Administration will allow for the International Entrepreneur Rule to go into effect on July 17.

Continuing conversations around tax reform offers opportunities to highlight the importance and positive impact of investment into high-growth companies—which reached 45 states and the District of Columbia, and 145 Metropolitan Statistical Areas in 2Q—to policymakers remains a priority for leaders in the venture industry.

Read more at:

National Venture Capital Association