Venture capital investment globally had a rough time in 2016.

Completed financing declined by 24%, and funding fell to $127 billion from $141 billion in 2015, according to a report released Thursday by KPMG.

KPMG’s Q4 Venture Pulse noted that after a strong start to 2016, investor optimism quickly waned and purse strings tightened in the second half. Geopolitical upheavals—Brexit and the U.S. presidential election, in particular — added to market uncertainty.

“2016 was a reality check for the VC market,” Brian Hughes, national co-lead partner at KPMG’s venture capital practice in the U.S., said in a statement.

“Investors drew back considerably. They paused, re-evaluated and focused on their existing portfolios and gave greater scrutiny to deploying new money to both new and existing investments.”

Though deal activity plummeted in 2016, the total amount of VC fundraising across the globe remained robust. U.S. fundraising increased to $41.6 billion from $35.2 billion in 2015. In Europe, capital raised hit a seven-year high of $10.5 billion.

KPMG said signs indicated that last year’s downturn may be indicative of industry normalization following a period of overheating, rather than a slump in the industry.

VC Funding

The U.S. saw the largest portion of both VC deal activity and funding globally in the fourth quarter, even though U.S. round counts fell by 22.3% year over year.

Funding levels dropped by 12.8%, from $79.3 billion to $69.1 billion. The decline in U.S. deal activity was also substantial — from 10,468 deals in 2015 to 8,136, the lowest level since 2012.

In Asia, although the total number of deals plummeted, the total amount of venture capital invested remained steady year over year, the only region in which this was so, at around $39 billion.

However, the fourth quarter ended on a low note, with 24.7% less investment and 29% fewer deals than the same quarter last year.

Investment in China was up year over year, reaching a record $31 billion invested, despite a drop in the number of deals from 516 to just 300 between 2015 and 2016. India showed an almost opposite trend, with the number of deals remaining relatively high, while total venture capital invested dropped more than 50%, from $8.2 billion to $3.3 billion year over year.

In Europe, VC investment declined by 14.6% in the fourth quarter, to $15.7 billion year over year. Although deal value fell by only 13% compared with the same quarter last year, the number of deals dropped by 42%.

Other Results

First-time financings to startups globally declined by 27.2%, from a high of $18 billion in 2015 to $13 billion last year.

In the Americas, first time financings took a big hit in 2016 — a significant sign of investor caution in a year characterized by significant market uncertainty, according to KPMG.

Funding to fledgling companies fell from a record high of $9 billion in 2015 to $7.2 billion. The number of first-time financings dropped to the lowest level in six years, with just 2,456 deals.

Although deal activity was down, median-deal sizes remained high across almost all funding categories worldwide last year, ranging from $30 million for Series D+ to $1.1 million for seed deals, indicating that investors were willing to pay for the right opportunities.

The number of new unicorns (companies with a valuation of $1 billion or more) minted dropped to just six in the fourth quarter, the lowest level since the term was coined in 2013, according to KPMG.

Venture-backed exits declined by 26% year over year. KPMG noted, however, that the IPO market may rebound in 2017.

It pointed to successful IPOs in Europe, which it said bode well for potential exits there: Danish payments firm Nets A/S, food delivery platform Takeaway.com in The Netherlands and online pharmacy Shop Apotheke in Germany.

In the U.S., Snap, the parent of unicorn company Snapchat, has already filed for an early 2017 IPO. If successful, other mature companies that held off during 2016 may likely decide to exit, KPMG said.

“Investors will likely remain cautious heading into 2017,” Arik Speier, head of technology at KPMG Somekh Chaikin in Israel, said in the statement.

“They have made tremendous efforts to raise funds while interest rates are low, but they’ll likely play it smart with investments. We likely won’t see the floodgates open until the IPO market opens up and we see what the valuations are.”

— Check out Hedge Funds’ 2016 Performance Reverses 2015 Loss on ThinkAdvisor.