Sure, but Joe VC's venture funds usually have a ten-year lifetime, so year-to-year fluctuations in the skittishness of investors shouldn't be that big a problem. Your average VC is still working to invest a big pile of money he raised years ago, while trying to raise money he won't invest for years.
Where do you think the money is coming from? There may not be an IPO market, but Joe VC is getting his capital from individual investors and organizations that are just as flighty and nervous as they were in 1999.
All it will take is one or two high-profile failures, and it'll be nuclear winter in the valley again. The mechanism may be different, but the results will be the same.