Union Square Ventures prepping $200 million fund?

Leader in Twitter, Zynga and Turntable.fm turns back to investors for more social media gold mining

Highly esteemed VC firm Union Square Ventures is in the process of raising a new fund sized between $150 million and $200 million, according to people who spoke with the Wall Street Journal.

We’ve reached out to the New York City group to get their official comment on the matter.

In late December of last year, an SEC filing revealed that Union Square had raised $135 million of a planned $200 million fund. Once it was officially announced the next month, the Union Square Ventures Opportunity Fund LP had grown to $165 million. The fund represented a shift for the firm, which had traditionally focused on early-stage ventures.

Though nothing is certain at this stage, the new fund which we’re now hearing about will likely return the spotlight to those early-stage startups. Particularly, Union Square has always been eager to find up and coming businesses in the social sphere, with Twitter, Tumblr and Zynga being a few of its most notable investments.

Here are three startups that recently secured funding in rounds led by Union Square:

• Earlier this week: Social music mixing site Turntable.fm closed $7 million.
• Earlier this month: Social investing platform Covestor closed $4 million.
• Early last month: Personal loan and peer-to-peer investing platform Lending Club closed $25 million.

For startups and entrepreneurs that would love to snag some cash from the big NYC VC firm, here’s one way to get noticed: be addicting and visible as hell.

“When turntable.fm launched, I wanted to avoid it,” muses Union Square managing partner Fred Wilson on his personal blog. “There was the Facebook login button that I didn't want to use. There was another music service I didn't want to add to my already-exhaustive collection. And then there was the matter of Seth and Billy, who may have the distinction of getting more "no thanks" from me than any other pair of entrepreneurs in the world. Seth got the first one from me in 1996 I believe, and they got the most recent one from me less than a year ago.

“But the service kept coming after me. It was showing up in my twitter stream, my facebook feed, my tumblr dashboard. My friends were on it and loving it. Our office was on it and loving it.”

In general, venture investment flow has remained fairly level this year, but the “Consumer Services” sector, which includes the social media favorites, is experiencing a boom. In Q2 2011, Consumer Services saw 138 deals done, versus 129 the year before, according to Dow Jones VentureSource. Over that same period, capital raised jumped from $877 million a year ago to $1.3 billion last quarter, for a 51 percent hike in capital activity.