There are a couple of articles suggesting a recovery of VC investments actually.

According to the mentioned study

"After hitting an eight-year low in the first quarter of 2003, the number of companies receiving venture capital for the first time increased slightly in the second quarter to 153 compared to 138..."

More interesting "All measures of early stage investing increased in the second quarter. Investments going into early stage companies jumped to $956 million, up 43% from $668 million in the prior quarter (Q1/2003)."

That's an interesting signal that we see early stage investments growing. It is a signal for market recovery and it shows that valuations compared to future value are justified. It also says a lot about expectations were public markets will go. The dependence on public markets has been excellently argued in ">Ventureblog some time ago.

Additionally Tim Oren and David Hornik are mutually declaring the bottom as reached.

So what should go wrong?