You have to remember that VCs are really middlemen between investors and startups. The supply of funding is very much driven by investor psychology as well as

You have to remember that VCs are really middlemen between investors and startups. The supply of funding is very much driven by investor psychology as well as various exogenous factors and startup valuations are driven by supply and demand rather than by what VC fund managers consider a good valuation to attain a reasonable return on investment.