According to a study released today and also covered here, venture capital investment in Silicon Valley is in a downturn last quarter due to high-value investments in already established and equally bright stars including social networking giants.

“… while liquidity, usually in the form of mergers and acquisitions and initial public offerings, has been improving, the overall amount of venture investing is continuing its recent decline as potential investors wait for a more sustainable VC model to appear…[study coauthor Barry Kramer :] There is hope, that with liquidity increasing, investments in venture funds will become more appealing, and venture capitalists will be able to raise more money, making more money available for entrepreneurial opportunities”

Kramer also noted that the reason why investors are holding back is because of  an existing lack of balance in the current venture model. Venture funds seem to be investing more than their own inflow of new capital, which means that in light of 5 consecutive quarters where up round exceeded down round, 52% compared to 30%, some of Silicon Valley’s industries may face a continuing decrease in funding.

Despite of Silicon Valley’s downturn, Chicago may have a something to be optimistic about. As mentioned here, Angel investors such as Jeff Carter, Andy Hagans, Lon Chow and Nick Rosa and more are quite eager to invest handsome amounts in Chicago-based start-up, perhaps even helping to seed the next generation of multi-billion dollars tech companies.

See here for John Furrier’s ramblings on angel investment’s roller coaster of a ride this year, and how it affects the industry at large.