The IPO market has been dry for months, M&A activity is way down, and VC firms say they have less money to dole out. What does that add up to? Well, apparently, confidence among the VCs in the Valley is on the upswing again. The University of San Francisco reports that its Silicon Valley Venture Capitalist Confidence Index is up after a six-quarter streak of declines. It rose to 3.03 (on a scale of 5) during the first quarter of the year, up from a five-year low of 2.77 last quarter. The survey asks VCs to gauge the “high-growth venture-entrepreneurial environment” in the Bay Area over the next six to 18 months.

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Before you get too excited: The confidence levels are just about where they were in the middle of last year. Still, the University of San Francisco’s Mark Cannice writes that, “While concern over the state of the national and global economy and financial system remains, a sense of foreboding appears to be giving way to an expectation of eventual, if slow, recovery in the high-growth venture environment.” Cannice attributes the change in sentiment—which he calls a “mustard seed of hope”—to some stabilization in the financial system as well as “more modest expectations for growth and valuations.” Cannice notes that when the index first plummeted during the fourth quarter of 2007, the exit market closed up shortly afterwards. Remains to be seen whether the IPO market will recover just as soon. The National Venture Capital Association, which reported last week the grim news that for the second quarter in a row there were no venture-backed IPOs, is not expecting a quick bounceback.