Actually a cyclical stock market cycle typically last 4 years. It's generally accepted that we've been in a bull cycle for the last few years, which is prone to shift, with the lackluster Facebook IPO as "the warning sign". If you're raising VC now, you've probably been in business for 1 to 2 years, which means if you exit in another 4 years, it could very well be a terrible secondary market by then. At least some investors will think so.

Poor market sentiment also affects M&A. I remember from my banking days in 2008, where one of my clients with $2 billion in cash wouldn't even fork over $100 million to acquire a company at 9x revenue with 80% revenue growth.

So over all exit options are appearing less attractive for VCs, thus they're likely to fund less companies at lower valuations.

If people investment was purely logical, you'd be right, but I suspect it is the negative news surrounding the valuations of Facebook and Zynga that will put a bit more fear into the investors willingness to take risks.

You know, you'd think someone who had a real job investing other people's money would be at least as rational as some guy on a message board....