The company is mulling over an acquisition offer that would give investors Accel Partners and Shasta Ventures their original investments of around $14 million back, but not much more. Founders and other employees wouldn’t make much from the sale.

Normally this is an easy offer to turn down. The company is doing well and has “plenty” of money left in the bank, sources say. The founders obviously would want to continue to grow the business and hope for a good outcome.

But for some reason at least one investor, Ping Li from Accel, wants to close the deal and take his original investments off the table. He has been pressuring the founders and management team to accept the terms offered, multiple sources say.

That’s left the founders frustrated, who apparently turned down an offer from Time Warner to acquire the company for $65 million or so a year ago. Li convinced the founders not to take that deal, sources say, and instead raise more money to go for a “home run.” Now, a year later, Li wants to sell the company for a small fraction of that $65 million.

Generally venture capitalists like to keep their money on the table when startups are doing well and aren’t in danger of folding, as is the case with Mochi Media. No one we’ve spoken with can explain why Li would want to force this deal on the company.

Li is a somewhat controversial venture capitalist – he was one of (or the) architect behind the extraordinary undoing of a $17 million round of financing for BitTorrent last year – we questioned whether Li violated his fiduciary duty to the company in closing that deal at the time.

Seeing venture capitalists square off against entrepreneurs is never fun. And as ugly as this situation has become, I don’t want to unfairly single out Ping Li. He’s got plenty of people that he’s invested in that say glowing things about him. For example, I spoke with Dennis Fong of Raptr this evening, and he says Li is a model investor.

This situation is more of an example of a trend that we’re seeing, where the goals of investors and entrepreneurs veer off in separate directions. It’s also a red flag for entrepreneurs in general – sometimes the needs of a venture fund can lead that fund to make bad decisions on behalf of their companies. Be prepared for that, protect yourself in contracts as much as possible and choose your investors wisely.

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These games are embedded on publisher sites and are very often “borrowed” by other sites who just lift the Flash files. So it’s important that the game files generate revenue directly. Ads served by the publisher around the game aren’t reliable. Mochi Media puts the ads directly into the games, so even if they are ripped off, the ads still show and create revenue.

The problem is these ads don’t make a whole lot of money – the industry average is around $0.50 per 1,000 game plays.

To fuel revenue growth to developers (and therefore Mochi Media), the company has launched a payments platform called MochiCoins with a handful of game developers. MochiCoins lets developers charge for game upgrades – users can pay for coins via credit card, PayPal or SuperRewards, and the coins that then be used to purchase upgrades in games.

The early results, we’ve heard from someone close to a game developer on the platform, are stunning.

Ninjakiwi’s SAS: Zombie Assault 2 is killing it. The game has normal Mochi Ads, but users can also purchase better weapons and other stuff to kill zombies faster and better. It’s addictive. I spent over an hour “testing” the game earlier this evening and spent $5 in upgrades in an astonishingly short period of time. Try it – you can log in via Facebook Connect and be spending money like a drunken venture capitalist in no time.

In early testing, says our source, users are buying stuff and lots of it. The average revenue has increased dramatically to $6.50 per thousand game plays.

Users are paying for upgrades and subscriptions on the iPhone, Facebook and other platforms already and proving that good apps and games can generate a lot of easy money. But what Mochi is doing is completely decentralized. The game I embedded on that page, without the developers permission, is making money for that developer and for Mochi Media.

In other words, go ahead and steal these games. They’d love nothing more.

Mochi Media has raised $14 million over two venture capital financing rounds.

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Mochi Media, a company that helps developers monetize their Flash games, has closed a $10 million Series B funding round. The round was led by Shasta Ventures with additional funding from Accel Partners, a previous investor.

Mochi Media’s flagship product is MochiAds, an advertising platform that allows Flash developers to embed ads into their games. Instead of placing ads on their webpages, developers can embed them within the Flash files themselves, which means they still get paid when they game goes viral and is placed on other sites.

Mochi Media closed its Series A Round of $4 million last March. The company has been able to establish itself in the gaming space, but faces a constant threat from advertisers in the Flash movie space, who could easily shift their focus to gaming.

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As has been well demonstrated with online video sharing, Flash files can spread fast. Flash games are a huge online trend right now but most advertising goes on via ads around destination pages that have games embedded in them. If those games leave those destination sites, then it’s easy for the game creator to lose control over ad revenues.

MochiAds are both preroll and mid-game visual ads. It’s a great place to advertise – users fully expect some load time in most Flash games and ads between plays aren’t terribly offensive either. Imagine preroll ads that viewers don’t hate! This may be less true once game designers more widely deploy ways to avoid the extended load times for these games, but for now it looks like compelling ad space. MochiMedia founder Jameson Hsu told me that Flash game players are watching “the game space” closely already and even if they don’t click through ads it’s a great brand advertising opportunity. Ad space is sold on a CPM basis and ads are served by game category. Viewers are invited to rate ads as they display. I think that all sounds quite valid.

I asked Hsu what would prevent any of the ad networks emerging for video to enter into the Flash games arena. He said (charmingly) “nothing.” The primary advantage that MochiAds has is that its analytics software, Mochibot, is already well known amongst developers. Developers receive 50% of ad revenue. The company has a financial foundation from licensing its analytics software to corporate customers seeking to track Flash video campaign success.

The company has already sold ad space to a handful of companies, including BitTorrent, Guba, Slide and HotorNot. I expect we’ll be seeing preroll and midgame ads placed by MochiAds in independent Flash games around the web in almost no time at all.

See previous TechCrunch coverage on this space in reviews of Bunchball blog embedded games and Kongregate, a destination site for user generated games with revenue sharing.

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