If you’re an active Twitter user, then you’re already familiar with Bit.ly, a web service that not only allows you to shorten URLs to meet the 140-character limit of the Twitter system, but offers up analytics, such as how many people clicked on the link and also talked about it somewhere on the web. Use of the service has been growing like wild mushrooms after a heavy downpour. Last month alone, 20 million folks clicked on Bit.ly-shortened URLs (though TinyURL is still the biggest URL shortener on the web).

That popularity has helped Bit.ly’s creator, New York-based incubator Betaworks, to raise close to $2 million in Series A funding from O’Reilly Alpha Tech Ventures, Jeff Clavier, Mitch Kapor and Howard Lindzon to spin it out into an independent company. Bit.ly will use the new funding to compete with a growing number of rivals, including StumbleUpon and Digg.

Betaworks has been actively building and or investing in Twitter-specific products; it sold the Twitter-focused search engine, Summize, to Twitter last year. Since then Betaworks has invested in Tweetdeck, a Twitter client built with Adobe AIR.