Ahead of SuperInvestor U.S. 2012 we interviewed Shawn T. Carolan, Managing Director, Menlo Ventures to get his thoughts on social media, super angels and whether it is still cool to be a venture capitalist. Shawn will be taking part in an expert panel session which will focus on how realistic and sustainable the recent extraordinary valuations of social and digital media firms are, who will be in the next phase of cocial media IPOs and what will be the next big innovation within this space.

Are the recent incredible exits & valuations from the social media sector sustainable?

In the current environment once a company starts to get promising traction the valuations can get very high very fast.  The interesting part is that most of these will flame out and enter the annals of Facebook & iPhone apps used for a day and never again, but a few will emerge, quite rapidly, as new major businesses on the Internet and, even at a really high price, make great investments.  Think of the Facebook invesments made at >$1 billion valuations that will make more than 10x.  =The social media and other markets have a long way to go and many great businesses will be created but lots of people will still lose money while a few win big.

What’s the next big thing in social media?

Apps that take advantage of the location awareness of mobile devices is a promising category.  TeleNav, on whose board I sit, is seeing very nice growth in their non-carrier businesses and emerging services like Uber (on-demand towncar), Cherry (on-demand car wash), GetAround (on-demand car rentals) and the like are showing very promising early results with a lot of headroom in the market.

Does the recent prominence of super angels and angel investors undermine traditional venture capital? Why/why not?

We’re very cooperative with the angel and superangel community and are grateful for what they do.  Startups have always needed different amounts of capital and different types of advice at different stages of their development.  You see some angels raise larger funds and go a little later, and some VCs allocate a portion of their funds for seed capital and go earlier (like our Menlo Talent Fund), but generally speaking when it comes time to take a model that is working and turn it into a company suitable for entry into the public markets there is a distinct role someone needs to fill and it’s still most often VCs.  The obvious part is the larger check in the $5+ million range but less appreciated and more valuable is the role an active board member can play in helping recruit and develop a great executive team, guide the strategy towards a scalable business model, and bring insights about what is working in the greater market that a company can leverage.  This role takes larger amounts of money and time and 5-10 companies is where VCs max out their capacity whereas some angels can make 50 investments in a year.  In the end, I’m sure most entrepreneurs will agree, it’s best to have as much money and good advice as possible to be brought to bear in helping them succeed.

Are the best deals in the VC space snapped up by the big brand name players? Have the ‘brand name’ VCs become too large to participate in true venture capital?

The best deals have multiple term sheets and the winning term sheet is always a combination of many factors including brand name of the firm, but it’s not the main criteria typically.   Other factors are valuation and other financial terms, portfolio companies that can be cooperative, and dry powder of the fund to support future rounds of funding.  Most often though the ‘winner’ of a competitive process gets the deal because the person who is going to be joining the board and the partnership at large showed throughout the diligence process a shared vision for the future of the business, a willingness to work hard for them, a network they can bring to bear to help, experience with the specific market or dynamics they are dealing with and established a good personal rapport.  As the old saying goes, taking a VCs money is worse than getting married because at least when a marriage doesn’t work out you leave with half.

Is it still cool to be a venture capitalist?

The scales are tipped in favor of being a hero entrepreneur, as they should be.