(Reuters) - Venture capital investors in the United States remained cautious about dealmaking amid economic uncertainty, according to a PitchBook-NVCA report released on Thursday, underscoring challenges in the industry despite a rally in public markets.

About $37.5 billion of deals were clinched in the third quarter ended Sept. 30, nearly 32% lower than the preceding quarter, the report said.

Limited liquidity has driven investors to negotiate tougher terms for startups, leading many to postpone funding until conditions improve.

The report highlights the challenges in the VC space, at a time when the spotlight has been on the massive rounds for artificial intelligence companies.

"AI companies are commanding the most attention in venture," the report said.

Despite the slowdown in dealmaking, interest rate cuts by the Federal Reserve may stimulate activity.

"Though 50 basis points won't be enough to jumpstart venture, it is a step in the right direction," said Emily Zheng, VC analyst at PitchBook.

A revival of the IPO market could further accelerate VC deals by providing investors with more opportunities to exit their investments.

PRIVATE FOR LONGER

Leading startups like Stripe, OpenAI and SpaceX are choosing to stay private for longer, offering employees liquidity by doing secondary share sales instead of tapping the public markets.

"Secondaries are the best of both worlds. Companies can stay private for longer and investors that want liquidity can get it," Zheng said.

The rising appeal of private assets may also be encouraging some to delay their IPOs, especially if they secure ample funds from private market investors.

"The democratization is going to come. The private market will continue to open and this new asset class is here to stay," said Howe Ng, head of analytics and investment solutions at private marketplace Forge Global.