Thanks both for a thoughtful discussion.
Just one important nuance -- VCs like me who come in early and stay with portfolio companies for 5-10 years are both on the "buy" and "sell" side of the market.
So yes, a slower VC funding environment does impact valuations favorably for VCs, for net new investments (the "buy" side), so I'm talking my book to some extent.
BUT net new investments is only a part of the job (<50% for sure) for a VC like me. Most of my time is spent working with my existing portfolio (sitting on boards, etc). And a harsher environment is bad news for my existing portfolio (and/or anyone's portfolio), and me (and/or investors like me) as a result. Like a lot of VCs, I've looked like a "genius" for the last couple of years as many of my investments became unicorns, with huge paper markups. Now it's likely that the pace of markups is going to slow down significantly. Perhaps we're entering a world of flat valuations - or even downrounds? No markups is not a good look for VCs - makes it harder to raise the next funds, etc.
So yes, in the long term, it's good for VCs if we're able to invest in (the right) companies in the 2022-2023 cohort at lower valuations. But that will take 8-10 years to manifest into concrete results, by the time those companies become very big. In the meantime, VCs won't have a lot of fun navigating a flat round/downround environment (if it does indeed materialize) with their existing portfolio.