Who said anything about VCs no longer funding Facebook apps? LivingSocial, a developer of apps that help friends share recommendations for stuff like beer and books, has raised a $5 million first round led by Grotech Ventures, along with personal investments from Steve and Jean Case. The Washington, DC-based company distributes such apps as ReadingSocial, BrewSocial and TuneSocial, each of which seems fairly self explanatory. Since launching in February, the company has booked over 6 million users, though that doesn’t necessarily mean they’re active day-to-day.

I chatted with CEO Tim O’Shaughnessy (formerly of both AOL (NYSE: TWX) and RevolutionHealth—hence the investment from Case) on his take of the whole space. He noted that the entire area has gotten a lot tougher for the obvious reasons: tons of new entrants, along with Facebook clamping down on certain “black hat” methods for attaining virality. LivingSocial isn’t just on Facebook, but so far, it’s still where the action is: “I think Facebook is very, very strong… It’s significantly higher (the activity) than the other networks that are out there.” Basically, Facebook is still used as a social utility, while the others (MySpace, Bebo, et. al) are still about content display. One interesting aspect of the company’s business model is that while most of these app networks are all ad-based, LivingSocial (because it’s oriented around products) has referral partnerships, such as with Amazon (NSDQ: AMZN). With the money, it plans to enhance its product and enter more categories.

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