Raising money from once-generous venture capitalists is becoming a more-challenging task for many startup founders in China， as the economy continues to slow and stock market volatility makes investors more cautious.

After pouring billions of dollars to fuel a startup boom over the past several years， mainly in internet-related business， venture capitalists are hitting the brakes on funding.

Venture capital firms made 698 investments in China in the third quarter this year， down 34% from the same period last year， according to Beijing-based Zero2IPO Research Center. The investment value of the 631 deals that released financial details totaled 21 billion yuan （$3.1 billion）， a 12.5% drop from a year before.

“During my 21 years in investment， the first half of this year is the first time that Ive felt the winter chill，” said Xu Xin， founder and managing partner at Capital Today.

Research from financial consultancy Taihe Capital indicated a broad capital market chill. From January through August this year， Chinese companies raised a total of 35.3 billion yuan through initial public offerings （IPOs） at home and abroad， a drop of 86% from the same period last year. Fundraising from primary markets also declined 66% in the third quarter from the first quarter.

Venture capital funds have turned more cautious about making new investments. So far this year， major investors such as IDG Capital Partners， Matrix Partners， Sequoia Capital and Banyan Capital have invested in less than a third the number of projects they invested in at the same time last year， according to Song Jingliang， founder of Taihe Capital.

This means startup founders are facing tougher scrutiny and negotiations to secure funding. According to Taihe Capital， the average time spent to complete a fundraising round has expanded to 9.5 months from about four months before July 2015. Meanwhile， the rate of successful deals has declined 20%.

Startups have tried to adapt to the funding drought by cutting costs and adjusting business strategies. Over the past year， several companies have decided to merge with rivals in a bid to sustain their businesses and ward off competition. Among such businesses are group-buying sites Meituan.com and Dianping.com， classified-advertising sites 58.com and Ganji.com， and the car-hailing-app companies Didi Dache and Kuaidi Dache.

The latest slowdown underscored the new reality for Chinas venture capital market as the economic growth entered a slower track and the secondary market cooled， according to Taihe Capital.

Xus Capital Today made the earliest investments into JD.com in two batches in 2007 and 2008 despite a global investment slowdown affected by the crisis. JD.com is now Chinas second-largest e-commerce company with a market capitalization of over $37 billion.

But the investment veteran recently warned a group of young entrepreneurs at a forum that this time， the capital market “is not just going through a winter period， but truly losing its steam.”

Feeling the chill

Only a little more than a year ago， venture capitalists in China were in an investment frenzy partly fueled by the governments vow to support innovation and startups as well as by a stock market boom. New funds were set up to target early-stage investments in domestic startups， and an increasing number of wealthy retail investors flooded into the market for higher returns， usually through buying into investment options from financial intermediaries.

But the growing heated market raised concerns about distorted valuations on startups and the bursting of bubbles. Some U.S. funds started slowing their pace of investment in China early last year.

The “pause” button was pressed after the stock market crash in the summer of last year， which wiped nearly 30 trillion yuan in value from the two main exchanges and sent shock waves through other stock markets around the world.