SAN FRANCISCO (NYTIMES) - The numbers are stark. Investments in United States tech start-ups plunged 23 per cent over the past three months, to US$62.3 billion (S$87.3 billion), the steepest fall since 2019, according to figures released on Thursday (July 7) by PitchBook, which tracks young companies.

Even worse, in the first six months of the year, start-up sales and initial public offerings - the primary ways these companies return cash to investors - plummeted 88 per cent, to US$49 billion, from a year ago.

The declines are a rarity in the start-up ecosystem, which enjoyed more than a decade of outsize growth fuelled by a booming economy, low interest rates and people using more and more technology, from smartphones to apps to artificial intelligence.

That surge produced now-household names such as Airbnb and Instacart. Over the past decade, quarterly funding to high-growth start-ups fell just seven times.

But as rising interest rates, inflation and uncertainty stemming from the war in Ukraine have cast a pall over the global economy this year, young tech companies have gotten hit. And that foreshadows a difficult period for the tech industry, which relies on start-ups in Silicon Valley and beyond to provide the next big innovation and growth engine.

"We've been in a long bull market," said Ms Kirsten Green, an investor with Forerunner Ventures, adding that the pullback was partly a reaction to that frenzied period of deal making, as well as to macroeconomic uncertainty. "What we're doing right now is calming things down and cutting out some of the noise."

The start-up industry still has plenty of money behind it, and no collapse is imminent. Investors continue to do deals, funding 4,457 transactions in the past three months, up 4 per cent from a year ago, according to PitchBook.

Venture capital firms, including Andreessen Horowitz and Sequoia Capital, are also still raising large new funds that can be deployed into young companies, collecting US$122 billion in commitments so far this year, PitchBook said.

Start-ups are also accustomed to the boy who cried wolf. Over the past decade, various blips in the market have led to predictions that tech was in a bubble that would soon burst. Each time, tech bounced back even stronger, and more money poured in.

Even so, the warning signs that all is not well have recently become more prominent.

Venture capitalists, such as those at Sequoia Capital and Lightspeed Venture Partners, have cautioned young companies to cut costs, conserve cash and prepare for hard times. In response, many start-ups have laid off workers and instituted hiring freezes. Some companies - including payments start-up Fast, home design company Modsy and travel start-up WanderJaunt - have shut down.

The pain has also reached young companies that went public in the past two years. Shares of one-time start-up darlings like stocks app Robinhood, scooter start-up Bird Global and cryptocurrency exchange Coinbase have tumbled between 86 per cent and 95 per cent below their highs from the last year.

Enjoy Technology, a retail start-up that went public in October last year, filed for bankruptcy last week.

Electric Last Mile Solutions, an electric vehicle start-up that went public in June last year, said last month that it would liquidate its assets.

PitchBook analyst Kyle Stanford said the difference this year was that the huge checks and soaring valuations of 2021 were not happening.

"Those were unsustainable," he said.

Mr Mark Goldberg, an investor at Index Ventures, said the start-up market has now reached a kind of stalemate - particularly for the largest and most mature companies - which has led to a lack of action in new funding.

Many start-up founders do not want to raise money these days at a price that values their company lower than it was once worth, while investors do not want to pay the elevated prices of last year, he said.

The result is stasis.

Additionally, so many start-ups collected huge piles of cash during the recent boom times that few have needed to raise money this year, Mr Goldberg said.

That could change next year, when some of the companies start running low on cash.

"The logjam will break at some point," he said.

Mr David Spreng, an investor at Runway Growth Capital, a venture debt investment firm, said he had seen a disconnect between investors and start-up executives over the state of the market.

"Pretty much every venture capitalist is sounding alarm bells," he said.

But, he added, "the management teams we're talking to, they all seem to think: We'll be fine, no worries".

The one thing he has seen every company do, he said, is freeze its hiring.

"When we start seeing companies miss their revenue goals, then it's time to get a little worried," said Mr Spreng.

Still, the huge piles of capital that venture capital firms have accumulated to back new start-ups has given many in the industry confidence that it will avoid a major collapse.

Mr Stanford said: "When the spigot turns back on, venture capitalists will be set up to get back to putting a lot of capital back to work.

"If the broader economic climate doesn't get worse."