The private equity group co-founded by Irish rock star Bono has approached investors seeking $1 billion for its second fund, buoyed by its success with investments in Facebook Inc and Yelp Inc, a person familiar with the matter said on Tuesday.

Elevation Partners LP, which shares its name with a hit song released by Bono's U2 band in 2000 and invests in the media, entertainment and technology industries, is hitting the fundraising trail as Facebook, its most high-profile investment, prepares for a $5 billion initial public offering (IPO).

Elevation invested $270 million in the world's biggest social network in three installments between 2009 and 2010, valuing Facebook at $16 billion, the source said, setting it up for huge gains, as the IPO could now value the company at between $75 billion and $100 billion.

The firm also committed $100 million in an investment in consumer review website Yelp in 2010 on the basis of a valuation of $500 million, the source said. Yelp completed its stock market flotation earlier this month and currently has a market capitalization of $1.4 billion.

Not all of Elevation's investments have been as successful. A quarter of its first $1.8 billion fund invested in smartphone maker Palm Inc, which yielded just a 1.5 percent return once it was sold to Hewlett Packard Co in 2010, the source said.

But overall, the first fund, which was launched in 2004, managed a net internal rate of return of 11.1 percent as of September 30, according to Washington State Investment Board, one of its investors. Its returns are set too be boosted by Yelp's and Facebook's IPO.

Bono became a founding partner in Elevation after he was introduced to Roger McNamee, a technology guru who co-founded private equity firm Silver Lake Partners LP, by Sheryl Sandberg, currently Facebook's chief operating officer.

McNamee is also a musician and performs 100 shows a year in the band Moonalice, where he plays bass and guitar. Moonalice's single, It's 4:20 Somewhere has been downloaded more than 960,000 times, according to Elevation's website.

Other heavy hitters involved in setting up Elevation include Apple Inc veterans Fred Anderson and Avie Tevanian, and former Blackstone Group LP senior managing director Bret Pearlman.

Elevation declined to comment. The launch of its second fund was first reported by Thomson Reuters peHUB.

(Editing by Andre Grenon)