The 2020 picture for venture capital funding was off to a strong start. In January, there were 126 venture financings in Silicon Valley alone — the largest number reported in a single month in at least five years, according to a new report from the technology law firm Fenwick & West LLP.

In February, that number halved to 60, then dropped to 44 in March (compared to 61 venture financings in March 2019) as the coronavirus outbreak began shuttering businesses. And while highly sought-after startups will continue to get funded, many won’t survive a post-pandemic world.

To be sure, the era of startups garnering sky-high valuations based on TAM (total addressable market) without a path to profitability was already nearing its end — but the global health crisis is accelerating this shift.

“Venture capital markets are pretty bi-modal. I don’t think this changes that much. For sure, more companies will fail as capital is less available. Companies with strong and committed partners will be much more likely to survive,” says Greg Sands, managing partner of San Francisco boutique firm Costanoa Ventures, which invests in early-stage SaaS (Software as a Service) companies, as well as workforce and marketplace startups.

But, he added, “Companies and firms that implemented the ‘growth at any price’ approach will hit the wall or need to take the most dramatic action.”

So-called unicorns, companies with valuations of at least $1 billion, were being scrutinized before the coronavirus pandemic. For example, in light of the disappointing Uber (UBER) IPO and the disastrous bet on WeWork, Softbank and its $100 billion Vision Fund have drawn scrutiny and immense losses. Last week, Softbank announced it’s expecting to record its biggest ever annual loss, much of it driven by a 1.8 trillion yen (~$16.7 billion) loss at the Vision Fund.

“During the ‘period of abundance,’ winners got anointed with nearly infinite amounts of capital for odd reasons, including because Softbank liked them. There was more of a focus on vision and total addressable market (TAM) than on the value of the product to customers, efficient growth and strong unit economics. Those things will be back in style,” Sands said.

‘Downward adjustment of valuations’

Eric Kim, managing partner of Silicon Valley’s consumer tech-focused VC Goodwater Capital, anticipates it will take 18 months for the market to fully digest and adjust to a post-pandemic world.

“There is a difference between moving bits vs. atoms. Those that are digitally oriented are benefitting and it’s only been accelerated. Platforms that combine convenience, better pricing and better selection will be better off at the end of the day,” he said.

Similar to the exuberance around stay-at-home trades like Peloton (PTON), Zoom (ZM), Netflix (NFLX), Spotify (SPOT) and Amazon (AMZN), Upfront Ventures managing partner Mark Suster points out the “obvious winners” he’s seeing in the private markets: “remote medicine, applied biology, food production & distribution, online education and remote collaboration to name a few.”

Even those firms that had healthy balance sheets prior to the pandemic will find it tough to raise capital over the next few years. And, this could be an opportunity for VCs to swoop in with less than favorable term sheets.

“A VC’s reputation is made or broken based on how they act in the bad times, and both founders and existing investors in a company will unfavorably remember anyone who tries to push through egregious terms right now,” said Suster.

“That said, just as valuations and terms experienced tailwinds in the ten years of a good economy, we should expect to see downward adjustment of valuations for a while as the market contracts. This is especially true when you consider what has happened in public markets and the view that this is likely to be a deep and long recession. Anyone who thinks otherwise is likely in for a hard road.”

Melody Hahm is Yahoo Finance’s west coast correspondent, covering entrepreneurship, technology and culture. Follow her on Twitter @melodyhahm.

Read more:

Jack Dorsey’s $1 billion pledge sparks discussion around UBI

‘I feel lost’: America’s freelancers left without income amid coronavirus financial crisis

‘When it comes down to it, it’s your neighbors who save you’: Nextdoor CEO

Coronavirus: US teachers try to ‘bring normalcy’ amid ‘very unique time in their little lives’