"The question is where will they get start-up funding/venture capital?"
There is still plenty of money in venture capital, and considering this is the #1 venture capital and #1 biotech area in the country, i don't see it as a problem.
PS. housing is down less than 10% in SF proper and mostly down due to outer undesirable areas. The tp areas haven't seen any dcline.
the peninsula elite towns (palo Alto, Athertown, los altos hills)are not down
However, The east bay and greater bay area is down quite a bit.