Demandware Inc., provider of on-demand software as a service e-commerce applications, has received $12 million in venture capital funding, bringing its total to $22 million, the company reported today.

The new funding, from a group of investors led by General Catalyst Partners and North Bridge Venture Partners, including participation from Demandware management, will support the continued development of Demandware’s e-commerce technology, its hiring plans, and sales and marketing activities, the company said.

Delivering an e-commerce platform using a software-as-a-service model presents clear benefits to the rapidly-expanding online retail market, said Michael Skok, general partner, North Bridge Venture Partners. Demandware is spearheading the movement by providing merchants with the merchandising control, flexibility, functionality and interoperability of a full e-commerce application suite with a usage-based pricing model.

Under the software-as-a-service model, clients pay only for the software services they use from a platform that can be shared by multiple clients.

Demandware’s customer base includes Vermont Teddy Bear, No. 174 in the Internet Retailer Top 400 Guide to Retail Web Sites, and Goldspeed.com, No. 325 in the Internet Retailer Top 400 Guide to Retail Web Sites.