Last time, tourist investors (newbies and the lay man) invested in stocks that crashed. Private huge rounds are protecting the tourist investors by virtue of lack of access.
This is what I'm getting at. Is that extent of it? Before the housing crash, most institutional investors thought it would be confined to the subprime market... but that wasn't true at all.
Where are the VCs getting all their money? Are mainstream banks exposed? Hedge funds? Corporations? Retirement funds?
I predict that the coming tech crunch will be a sideshow in much bigger chaos caused by the effects of rising interest rates on newly-minted college grads. We live in a bubble in Silicon Valley; across most of the country, youth employment never really ticked upwards. If interest rates go up, I think we'd start to see widespread non-payment of student loans and possible political unrest. That's much scarier than a few startups going belly-up.
[1] http://nvca.org/pressreleases/annual-venture-capital-investm...
[2] https://en.wikipedia.org/wiki/Subprime_mortgage_crisis#Subpr...
[3] http://www.forbes.com/sites/specialfeatures/2013/08/07/how-t...
VCs raise money from Limited Partners (LPs). Who are they? The regulars of course (fund of funds, foundations, endowments, large family trusts, pension funds, etc), but it seems pretty common for VC firms to also take on money from other wealthy individuals who made a lot of money from the machine, i.e., founders who got big exits and even other VCs or ex-VCs who likewise previously made bank.
In other words, there's a surprising amount of circulation or recycling of funds in the bay area tech scene. And that's awesome, win or lose.
It all eventually comes back to the Federal Reserve. Interest rates are at record lows (much below a "market" rate), and funds are taking advantage of this to flood money into stocks, housing, tech companies, etc.
I'm not an expert, but I think most VC funds have a 10 year lifetime. Once a fund raises money and closes, it can't really be dissolved during those 10 years. Maybe the post-bubble lack of unicorns would mean the new/existing funds don't return anything, but most small VC funds don't end up having attractive returns today (especially taking into account their illiquidity).