Social games maker Digital Chocolate raises $12M

Digital Chocolate, a developer of social games that appear on sites like Facebook, announced today that it has raised $12 million in its fourth round of funding from Intel Capital.

While social gaming is still dominated by the likes of Zynga, the race for second best is still heating up. Zynga holds a commanding lead with 272 million users across all its games, according to AppData. The next closest developer, Badoo, has 45 million users. The difference between the next 10 developers is much closer — with the 15th most popular app running with around 16 million users.

Digital Chocolate still stands a little further behind the giants of the social gaming mafia, which include the likes of Zynga, Playfish (now owned by Electronic Arts) and Playdom (now owned by Disney.) Digital Chocolate is currently the 12th most popular app developer on Facebook with about 17.6 million users, according to AppData. Its most popular game, Millionaire City, has about 12 million users and is ranked 14 on the list of top Facebook applications.

The funding also comes at a time when social games are seeing ballooning valuations. Zynga, which made games like Farmville and Cityville may be worth as much as $10 billion after reportedly raising $500 million— which would put it ahead of Electronic Arts, a publicly-traded company, in terms of market cap. The top game company in the world is Activision-Blizzard — the publisher behind World of Warcraft and the Call of Duty franchise — which has a market cap of about $13.3 billion.

Digital Chocolate certainly hasn’t shied away from challenging the likes of Zynga. It recently sued Zynga, saying it had rights to the name “Mafia Wars” — one of Zynga’s most popular games on Facebook with about 28 million users. Sutter Hill Ventures and Bridgescale Partners also participated in the most recent round of funding. The San Mateo, Calif.-based company has raised $55.9 million to date over four rounds of funding.