LivingSocial, the local leader in providing great deals and experiences recently got funding from the online store giant Amazon, marking a big opportunity for the local marketing company, but also a pattern for Amazon, in this hot and growing area. LivingSocial secured a $175 million investment from Amazon and an additional $8 million from Lightspeed Venture Partners.

The funding harnessed will be used to propel the business’ innovation and better serve more than 10 million subscribers from UK, US, Canada and Australia.  But in light of Groupon’s bloated valuation and Amazon’s investment, many wonder if the space is getting flooded with too much cash too quickly?

With its speedy expansion, LivingSocial is looking at $1 million revenue daily that would stack up to $500 million by 2011.  LivingSocial now spans 89 diverse markets, and boasts over a million members and sign ups.  The local deals site also witnessed a recent expansion to Honolulu to Fresno, and Greenville to Glasgow.

It is also important to note that while LivingSocial gets funding from various institutions, it also has its own share of ventures—one of which is the $5 million investment they made to Jump On It. An acquisition by LivingSocial that also made a big impact is Urban Escape—an adventure planning company.  MediaPost wonders if LivingSocial’s funding is sign of a feeding frenzy, noting the string of events that’s spurring an entire industry to take action, including eBay and it’s recent acquisition of Milo.com.  The Washington Post goes on to note mixed reactions from merchants as LivingSocial ramps up.

In an official statement before the press, Tim O’Shaughnessy, CEO of LivingSocial, explains the current state of the organization and its vision.”To be the biggest player in the local commerce space there is no one better to work with than Amazon. As the social shopping space continues to heat up, LivingSocial is committed to staying focused on providing the high level of quality that consumers and merchants have come to expect when working with us.”

Most times Amazon funds a company of this calibre, it goes on to acquire it within a year or so.  Amazon would certainly want to get more involved with mobile, hyper-local marketing, as it’s an e-commerce retailer.  Amazon’s also been steady on its mobile efforts, with a wide array of shopping and other retail-oriented apps and devices, such as the Kindle. There has been a rise in interest for hyper-local deals tools, in light of the rumored Groupon acquisition by Google. The reports estimated that the bid would go up to a whopping $6 billion.