New San Francisco startup Heyzap is providing website owners with a quick and easy way to incorporate casual Flash games into their pages using a simple widget. Originally launched back in January, the widgets are now embedded in more than 20,000 different web sites, with more than 12,000 free Flash games to choose from.

Run by Immad Akhund and Jude Gomila, Heyzap recently raised a round of seed funding from Union Square Ventures, with independent investors Naval Ravikant (Hitforge) and Joshua Schachter (delicious) also participating. The amount of funding was said to be “above $500k and less than $1 million.” This funding is a follow-on to the small Y Combinator funding it raised back in September.

Currently, a big part of Heyzap’s business strategy is to partner with major online publishers such as Current and Cooliris. These publishers can utilize Heyzap’s recently released API to choose contextually relevant games to appear inside their sites.

Heyzap is helping developers get better distribution as well. Thus far, revenue is garnered through in-game video advertisements powered by Mochi Media, as well as a recently launched payment system that allows consumers to buy virtual goods directly in the widget. Heyzap mentions the following scenarios where developers are integrating its payments platform successfully:

• Item purchases – buy swords shields
• Level access – let user access premium levels
• Mechanic upgrades – let users change gravity and other special mechanic
• Bonus upgrades – let players save time in the game
• Full version upgrades – let the user upgrade from a demo mode to a full version
• Content upgrades – let users access special content e.g. a secret video
• Social upgrades – let users perform special social interactions like private messaging each other

The company does have a good deal of competition out there when it comes to APIs and 3rd party products for web-based games. Kongregate, Games2Win, Gameyola, Addicting Games, and Come2Play are a few that come to mind – but Heyzap is growing nicely so far this year.