Venture capitalists poured more dollars into Silicon Valley companies in the third quarter than the previous three months, marking the second straight period of increase — and defying a decline seen nationally (here’s our story).

flip.gifWe chatted Friday with Flip Gianos (left), a partner at Menlo Park’s venture firm InterWest Partners. He said that even though venture capitalists keep investing, their profits are looking pretty slim. They may be reporting decent results to their investors, but he said that’s because those results are still only on paper. Most VCs haven’t locked into that value because they’re still carrying those investments, and haven’t sold them. And that value on paper is because VCs are paying a high price to…

entrepreneurs to be able to access good deals. So before you think VCs are doing great, be sure to wipe away the smoke and sidestep the mirrors.

Overall, though, the $2.027 billion that venture capitalists invested in the valley, 5.6 percent more than in the second quarter, may be only a small blip of upward aberration. Over the past couple of years, investment levels both here and nationally have bobbed up and down within a relatively narrow band — and the local increase doesn’t yet diverge from that steadiness.

National investments increased compared to last year, but declined relative to the second quarter. The latest data was published in a quarterly report by VentureOne, a San Francisco venture research group, and Ernst & Young.

Another factoid: Silicon Valley now claims 37 percent of the nation’s overall venture capital investments, up slightly from its level of about a third seen over the past several years.