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What tech bubble? VC funding drops in 3rd quarter

Venture capitalists apparently put away their checkbooks in the third quarter.

VC funding dropped 29 percent to $9.79 billion, and deals decreased 10 percent from the previous quarter, according a report from CB Insights published Tuesday.

Considering that during the second quarter VC funding hit $13.9 billion, a quarterly high not seen since the Q1 of 2001, the drop was significant.

The number of U.S. VC-backed IPOs also cooled off during the quarter. Eighteen VC-backed companies went public compared with 24 in Q2 and 35 in Q1. And only one of the 18 VC-backed IPOs was a tech company. Alibaba's massive IPO may have contributed to the decrease of companies going public.

Also, while deal volume was down and VC funding had a sharp decline, there are still signs of continuing froth.

For example, it's still easier for a tech company to raise funding at a $1 billion valuation than to go public at the same price.

This year 21 tech companies have raised a first round of financing at $1 billion compared with just seven tech firms that have gone public at the same valuation or more, according to CB Insights.

And the $33.75 billion of VC-funding raised during the first three quarters of this year is still up 59 percent from the same period a year ago.