The first quarter of 2015 wasn’t a great one for economic growth, earnings, or initial public offerings.

And that weakness was echoed by venture capitalist sentiment in the latest Silicon Valley Venture Capital Confidence Index, out on Tuesday.

Optimism about the investment climate in the next six to 18 months, measured by the index on a scale of one to five, dropped to 3.81 from 3.93 in the fourth quarter of 2014. In the first quarter of 2014, confidence was measured at 4.03. (Over the last 45 quarters, the average score has been 3.72.)

“It sounds slight, but it’s a meaningful drop,” says Mark Cannice, a professor of entrepreneurship and innovation at the University of San Francisco School of Management, who led the study.

Among the factors causing venture capitalists to feel more guarded about the future are the sky-high valuations of many late stage companies, which some feel are in bubble territory, as well as the increasing amounts of money coming from non-traditional sources, including institutional investors, hedge funds and family offices.

One particular concern, Cannice says, is that institutional investors and family offices tend to lack the deep management experience and connections to potential customers and other sources of business that venture capitalists have.

Dag Syrrist, general partner of Vision Capital told the index researchers that it was disoncerting to see mutual and private equity funds, among other less traditional sources, piling into big financing deals because they have the ability to write large checks. 

"This will end badly for many, even if some will make exceptional returns on the way," Syrrist said.

Indeed, in the past two years, according to venture capital research firm CB Insights, 50 startups have achieved valuations of a $1 billion or more. And some of those companies, such as car-share service Uber, social-messaging app Snapchat, and social-media site Pinterest have gone much further, achieving record valuations of $40 billion, $19 billion, and $11 billion, respectively.

Meanwhile, the number of IPOs in the first quarter took a beating, dropping 54 percent to a mere 17 deals, according to a recent National Venture Capital Association report. Similarly, mergers and acquisitions also suffered, falling by 25 percent 86 deals, NVCA reports.

While venture capitalists seemed to think the overall market fundamentals in Silicon Valley are strong, many fear that the hyper-inflation in late-stage company valuations was troublesome and subject to a correction from a global shock.

“My concerns are irrational exuberance and the possibility of a black swan macro shock,” Bill Reichert, managing partner of Garage Technology Ventures said in the report.

And for other venture capitalists, like Cindy Padnos founder and managing partner of Illuminate Ventures, the valuation environment was a reminder to return to basics.

“It’s a good time to remember the value of valuation discipline, early capital efficiency and strong reserves,” Padnos told researchers.

The index is based on responses to questions sent to 50 prominent Silicon Valley firms each quarter. In the most recent sample, 33 venture capitalists from firms including BlueRun Ventures, Canaan Partners, and Draper Fisher Jurvetson participated.