Venture capitalist confidence continues to drop, according to Professor Mark Cannice of the University of San Francisco. Cannice’s Silicon Valley Venture Capitalist Confidence Index, which has been compiled quarterly for nearly five years, has hit a new low — for the fourth consecutive quarter.

Cannice says he surveyed 33 Silicon Valley VCs in September to calculate the index, which now stands at 2.89 on a 5-point scale.

This is hardly surprising news, given the state of the overall economy. Last week, Sequoia Capital gave its portfolio companies a presentation declaring “RIP Good Times” and saying startups need to get serious about revenue and cost-cutting if they want to survive. Famed angel investor Ron Conway also sent out an email warning companies about tough times ahead. Other VCs have cautioned against panic, but it’s hard to deny that business is getting rough. A slightly more optimistic survey of VCs and other finance professionals released by KPMG in April, though not an apples-to-apples comparison, is also interesting to compare to Cannice’s study.

So what does this mean for startups? Cannice says drops in VC confidence normally presages a drop in the dollar amount of venture-backed IPOs. Of course, it’s hard to fall much further, when there was only one IPO in the third quater of 2008, and zero in the second. Pretty much everyone understands that it’s going to be a lot harder for new companies to get venture backing, and VentureBeat Editor, Matt Marshall, has also predicted there will be a lot of venture pressure to lower startup valuations.

Meanwhile, in other bad-but-unsurprising news, the stock market is plummeting after a rebound earlier this week. As of 11am Pacific, The Dow Jones Industrial Average is down around 536 points (5.76 percent), while the Nasdaq is down around 110 (6.17 percent).