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While venture capital (VC) funding into Indian startups started on a seemingly brighter note in the first week of July, this week saw a drop—the second lowest level so far this year.

Cutting across 14 deals, the total VC funding for the second week of July stood at $41 million. The last time it fell lower than this figure was in the third week of April at $18 million, as per YourStory Research data.

In fact, it is the fourth time this year that VC funding has fallen below $60 million on a weekly basis, revealing the deep challenges the startup ecosystem is facing in terms of raising capital. Seemingly, the overall funding momentum for this year is likely to be subdued, and any hopes of recovery may start well from next year.

According to industry observers, a great deal of uncertainty is among investors waiting on the sidelines who feel it to be not an opportune moment to invest. Early-stage investments, ranging from pre-seed to Series A, continue to witness activity, but the funding amount remains small.

On the other hand, late-stage funding has seen little momentum, and the absence of large deals has contributed to the lower funding activity. Investors are witnessing stress in this category, further compounding into lower investment activity.

Meanwhile, there were some positive developments for the startup ecosystem as Flipkart announced the start of its ESOP buyback programme.

Also, the woes faced by edtech unicorn BYJU’S do not seem to be ending anytime soon, although it has inducted industry veterans T V Mohandas Pai and Rajnish Kumar on its advisory council to provide the right guidance for the company.

Overall, the funding environment remains challenging, and this is going to be a tight walk for all the startups.