Free social networking and casual gaming applications are finding alternative business models to survive through the ad recession.  One of these models is ‘virtual gifting,’ which allows users to purchase other users 'digital gifts' within the application.  

Viximo, which provides virtual goods solutions for social networking, online dating and social gaming sites, has raised $5 million in VC funding from investors including North Bridge Venture Partners and Sigma Partners, says Virtual Goods News.

The Cambridge, Mass., based startup offers a platform for content creators, brands and publishers across the Internet to create, distribute and monetize off of virtual goods.  For gift creating artists, they can upload goods into Viximo’s Creator Community where users can buy and send those items to their friends via Facebook apps, social networks and other gaming sites.  The creators receive a 20% royalty of every item of theirs that is sold.  Currently, Viximo distributes gifts through 7 publishers, in which it claims can reach over 10 million potential buyers.  

Besides distributing virtual gifts across multiple sites and apps, Viximo offers a microtransaction solution for buying and selling of apps, along with an analytics platform to track user engagement.

Viximo, has also created an iPhone application development platform targeted for interactive designers, not programmers.

The startup currently employs about 20 people and is looking to hire more.