Yahoo's M&A deal-makers are deciding right now whether or not to buy super-hot location-based startup Foursquare for around $100 million, says a source close to bankers involved in Foursquare's current fundraising efforts.

A source close to Yahoo told us a Foursquare-owned Yahoo "would be nice." This source told us "we've had discussions," but cautioned: "We talk to everybody." For his part, Foursquare CEO and cofounder Dennis Crowley spent all last week meeting with all the big name companies in the Valley, including Apple, Facebook, and Twitter. Reached, Dennis declined to comment.

A Foursquare acquisition makes tons of sense for Yahoo, where product executives believe that paradigm of Web pages could soon go away, to be replaced by a universe of service built on Internet-connected devices in, around, and outside the home. It would be a relatively cheap way for Yahoo CEO Carol Bartz to show employees and Wall Street that she's serious about innovating.

Yahoo hasn't made many big bets on consumer products since its Web 2.0-era acquisitions Flickr and Delicious. At one point before 2007, Yahoo could have purchased Facebook for $1 billion, but then-CEO Terry Semel balked at the price and the amount of control Facebook cofounder Mark Zuckerberg wanted to retain.

Thing is, we'd be surprised to see Foursquare sell so soon. During a recent interview with SAI, Dennis said he only sold Dodgeball, his first location-based startup, to Google because, "We couldn't get any funding."

That's not an issue for Dennis this time. Reports have it that brand name venture capitalists (Khosla, Accel, and Andreessen Horowitz) are competing to give Foursquare money at a valuation of $80 million more. Dennis could be using talks with Yahoo to milk higher valuations out of these investors.

Reached, a Yahoo spokesperson told us "We don't comment on rumor or speculation."

[Republished from Photo via Laughing Squid/Flickr]