The venture capital market continued to slow in the third quarter, but the number of deals was unexpectedly high, according to a first-look release early Thursday from PitchBook-NVCA ahead of its quarterly Venture Monitor report next week.

Describing deal activity as showing “more signs of distress,” the number of VC deals fell for the third consecutive quarter, down by almost 20% from the quarterly record high in the first quarter — 4,074 deals versus 5,049. The number was also the lowest number seen in any quarter since the fourth quarter of 2020.

The third quarter saw $43 billion invested in VC deals across all stages, a nine-quarter low, reflecting what PitchBook describes as investor hesitancy and an increased focus on business fundamentals amid the global economic downturn. But on a historical basis, the number of deals and the amount invested is relatively high.

Even though the amount invested into startups may be slowing, VC firms still have serious money to spend. VC funds raised a record $150.9 billion through the first nine months of the year, higher than the full year’s record high in 2021. Over the last 21 months, VC funds have raised $298.1 billion.

“Given public market turbulence and frozen avenues for liquidity, we expected LPs [limited partners,  the investors in VC funds] to be concerned about their overexposure to this asset class and the potential for timely returns negatively impacting fundraising activity,” the report explained. The slowdown is reflected in the third quarter, where VC funds only raised a modest $29.4 billion, the lowest quarterly amount this year.

Exit activity, which has been hit hard this year amid 40-year high inflation, a technical recession and the war in Ukraine, continued to be weak in the third quarter. Some $14 billion in exit value was generated across 302 exits in the third quarter, the lowest quarterly figure since 2014 and well down from the record high of $266.8 billion in the second quarter of 2021.

A highlight in the quarter was noted to be Adobe Inc.’s intention to acquire web-based design platform company Figma Inc. for $20 billion, though that deal has not yet been finalized and hence is not counted in the third-quarter figures.

“Few options remain for the growing group of unicorns, as 2022 has produced only 60 public listings, just one year after a record 303 VC-backed public listings generated $670.0 billion in exit value,” the report notes. “With the expectation that the current slow environment will remain, this year’s total exit value is in danger of falling below $100 billion for the first time since 2016.”

The full quarterly Pitchbook-NVCA Venture Monitor is scheduled to be published on Oct. 13.

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