Inhale Digital Raises Round to Build the Groupon of Virtual Goods

What’s better than Groupon? A hybrid approach that mixes both the best of daily deals and Zynga’s addictive social games, like Mafia Wars and CityVille.

To be sure, this is on a much smaller scale than either of those two companies — it’s just getting started.

But Inhale Digital thinks it is on to something by offering so-called daily deals for online games, including game credits and virtual goods.

The New York-based company is officially launching today, and is announcing that it has raised $1.1 million from investors, including Canaan Partners.

For example, one of its deals could say that social game, Spa Retreat, will offer “50 Summerlight credits, 2,000 coins, five diamonds and one astrology center.” This bundle, normally valued at $8, will cost $2.99. Or, Inhale Digital will offer free credits in Chocolatier: Sweet Society are normally valued at $3.

Inhale Digital is integrating its offers into Facebook, allowing users of the social network to sign up for the deals, and discover new games. The first games publishers on the Inhale Digital platform include Hexify, Horseracing Simulation, Summerlight, PlayFirst, and Three Rings.

Gerard Cunningham, CEO and founder of Inhale Digital, was formerly the founder and president of Betfair, an online wagering company, and also held positions at Lands’ End and the Gap. In a release, he said: “The online game market is exploding, yet online game discovery is broken…Games that might not otherwise find paying players will find themselves embraced by an eager market.”

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik