Startup values decline, but some companies still investing big money.

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As the smoke clears from the hot startup market, and venture capitalists start seeing that many of these companies are valued at unsustainably high levels, a valuation correction is taking place.

“Everyone’s kind of going back to their knitting,” says Anton Levy, managing director and head of global internet and technology at growth investment firm General Atlantic. “That’s the time where I think you see us be much more aggressive and deploy capital.”

Venture capitalists like General Atlantic are definitely having to reevaluate how they deploy that capital in light of valuation changes. Several high-profile tech startups saw their valuations plummet in early 2016. Mutual fund investor Fidelity wrote down the value of Snapchat by 2 percent and the value of its own stake in the company by 25 percent. It also said that it cut the estimate of its stake in Dropbox by 31 percent.

Good Technology sold to BlackBerry in September for less than half of the $1.1 billion valuation it was given a year ago. Early this year, Tumblr was valued at about $230 million less than the $1 billion Yahoo paid for the blogging platform in 2013.

In the first quarter of 2016, there were 14 tech company down rounds or exits below previous valuations. In the fourth quarter of 2015, there were 16. That compares to a total of 13 events over the second and third quarters of 2015, according to CB Insights.

However, some investment firms see the apparent collapse of the most recent tech bubble as the best possible time to increase funding to startup companies.

General Atlantic funded Flipp, a startup focused on creating digital versions of the advertising circulars typically seen in newspapers, to the tune of $61 million.

“We saw a $15 billion business still stuck in printing paper,” says Flipp CEO Wehuns Tan. The company ran a study with Nielsen and found that, although up to 84 percent of shoppers still check print circulars, Millennials are looking online for coupons and deals.

General Atlantic found Tan’s business proposal worth investing in. The firm has long been involved in digital news media, having invested in BuzzFeed and Vox, among others. The company’s vice president, Zachary Kaplan, joined Flipp’s board as part of the funding deal.

But even the very big players are getting back into the venture capital game now that startup valuations have undergone what many refer to as a natural correction.

Byron Deeter, a partner at Bessemer Venture Partners, says he expects companies like Google, Facebook, Alibaba, Adobe, IBM, and Microsoft to be “very aggressive” acquirers of private startups.

Much of that is because venture capitalists want to see their startups bought, and they’re approaching the tech giants to do just that. Before this year, initial asking prices for some of these startups were so high that even the leviathans in the tech world didn’t want to touch them.

“For the last three to four years, a lot of public companies stood back and watched all the drama and bubble, bubble, bubble in Silicon Valley,” says Marc Andressen, co-founder of VC firm Andressen Horowitz. But now that startups’ valuations have plunged from the stratosphere to more reasonable levels, “public companies have piled up a lot of cash and they have to go shopping. There will be a whole run of M&A this year and next.”

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