Arena Solutions Inc. enlisted insider Otter Capital of San Francisco as lead investor in its $5 million third round, but rounded out the modest deal with heavy hitting individual investors Arthur Rock and Warren Hellman.

The Mountain View, Calif., marketer of on-demand software for product life cycle management raised $9 million in prior funding, and was on track for profitability in late 2004, said founder and CEO Michael Topolovac. But it opted to raise the additional $5 million to maintain that schedule while accelerating revenue growth.

The round was kept among insiders and individuals to limit the time spent fundraising while boosting the strategic value new investors Rock and Hellman could bring. The round was raised despite no immediate need for capital, at the behest of B round leader Otter, which offered the new money along with additional investors Hellman and Rock, at a valuation that precluded any additional fundraising. The B round included a strategic investor from Ideo Corp., a Palo Alto, Calif.-based product design and delivery company, and an early Arena customer.

“The beauty of the business model is that it doesn’t require much capital, and we came to the conclusion that the amount of time and energy required to raise money from new institutional investors wouldn’t be worth it,” said John Pasquesi, Otter Capital founder and Arena chairman. “Most institutions want to make a bigger investment, and both Warren Hellman and Arthur Rock have helped build big companies, which will be important as we expand sales to large organizations.”

Hellman is chairman of San Francisco’s Hellman & Friedman LLC, which has engineered buyouts of such companies as Levi Strauss & Co. and Young & Rubicam Inc., while pioneer venture capitalist Rock was instrumental in the early growth of Fairchild Semiconductor, Intel Corp. and Apple Computer Inc.

Pasquesi, a former managing director at Hellman & Friedman, brought both new investors into the deal.

Topolovac said he had briefly considered taking the deal to others, but recognized the challenging nature of the current venture capital market, and agreed with other investors that a quick round to limit distraction and keep down dilution would be best. He would not disclose the valuation of the deal, but said the size was kept down, and that Arena may raise additional money after passing the significant milestone of profitability next year.

Arena used no outside financial adviser, and had legal representation from Daniel Dorosin of Fenwick & West LLP. The investors were represented by Joseph Radovsky of Greene, Radovsky, Maloney & Share LLP.

Arena, which changed its name from Bom.com in February, makes software that helps companies manage all aspects of product management. The company’s original name came from “bill of materials,” a term commonly used in product management to refer to all aspects that go into a product, and Topolovac said the company changed its name not so much because of the unfortunate homonymic allusion to Internet failures, but because it identifies too closely with a parts list, rather than larger management issues.

Unlike other product lifecycle management leaders, including Agile Software Corp. of San Jose, MatrixOne Inc. of Westford, Mass., Parametric Technology Corp. of Needham, Mass., and Electronic Data Systems Corp. of Plano, Texas, Arena believes it is the only one to offer its product in a hosted, or on-demand, format.

Topolovac developed the germ of the company’s product while heading Light & Motion Industries, a Santa Clara, Calif., company he founded to make casings for specialized cameras. Camera makers demanded constant updates of casing design to accommodate new products, and Topolovac created product management software to ease the flux of workflow around designing and producing new versions of products. By the time he formed Bom.com in 2000, he recognized that the Web would be an ideal format for delivering product management items.

Arena’s hosted business model is akin to the much maligned applications service provider model that sank so many companies during the Internet bubble, but Arena sells only its own proprietary software, rather than offering products from other enterprise software makers.

By offering its proprietary products in a hosted model, Arena believes, it can offer much more scaleable service, costing customers about $25,000 for an implementation for 10 users, compared to $230,000 for a client-server installation.