Deal of the Day: Amazon pumps up LivingSocial

December 3, 2010, 8:33 PM UTC

The Term Sheet sends out an email each morning (sign up here), which includes blurbs on all of the day’s venture capital and private equity news, plus any other notable M&A activities. It also picks one deal to highlight. Here is what got today’s top billing:

LivingSocial, a Washington, D.C.-based online deals site, has secured a $175 million investment from (AMZN). It also raised $7 million in new funding from existing shareholder Lightspeed Venture Partners. Prior to these infusions, LivingSocial had raised over $30 million from Lightspeed, U.S. Venture Partners, Grotech Ventures and Revolution LLC.

This is today’s big deal for a variety of reasons:

First, the dollar amount is absolutely enormous. For context, rival Groupon’s total VC funding falls short of Amazon’s investment in LivingSocial.

Second, it is entirely possible that this deal could have an impact on the final Google-Groupon acquisition price, as LivingSocial now looks poised to make a real competitive run.

Third, the Google-Groupon deal ultimately could make this investment look like Bezos’ folly, since LivingSocial could have a tough time getting visibility on the world’s largest search site.

Finally, it’s been a long time since I’ve seen so much investor hyperactivity in an online vertical. Not just LivingSocial and Groupon, but also new funding rounds (see below) for Lashou and WhaleShark Media. Hey tail, stop wagging that dog…