Several months after just about every venture firm told their portfolio companies to prepare for a funding drought, some investors are saying the health of the startup ecosystem may not be as dire as it once seemed.

Investors are expressing renewed, albeit cautious, optimism thanks to strength in some tech earnings, particularly of cloud companies, which has helped stabilize public markets recently. Other positive factors include a sense that inflation may have peaked, receding fears of a deep recession and VC’s record levels of dry powder. Investors remain uncertain about the direction of the economy and highlights the fragility of the current rebound in dealmaking. But in the meantime, startups are gradually accepting that valuations have declined from their 2021 highs.