Energy-management company Fat Spaniel Technologies said Wednesday it has closed $18 million in its second round of venture-capital financing.

Investors include Ignition Partners, which led the round, Element Partners, Chrysalix Energy, Pacific Corporate Group and Applied Ventures, the venture-capital arm of Applied Materials.

The funding brings Fat Spaniel's total capital to $25 million, as the company raised $3.5 million in each of two parts of its first funding round in April and October of last year (see Energy Startup Gets $3.5M and Three Huge Solar Trends).

San Jose, Calif.-based Fat Spaniel sells software that monitors and manages energy production from renewable-energy systems. Last year, the startup introduced a product that can monitor energy generation at multiple sites in order to take advantage of the trend toward third-party project financing, in which a financial company pays the up-front costs of a system in exchange for a customer agreeing to buy the power.

The startup plans to use its newfound cash to expand its sales and marketing efforts to European and other international markets and to broaden its product offerings.

Greentech Media spoke with Chris Beekhuis, president of Fat Spaniel, to get the low-down:

Q: Why have you decided to expand into Europe now?

A: Europe is becoming much more investor-driven in terms of its renewable energy, in the same way that North America has moved in that direction over the last 18 months. And the markets are eight to 10 times the size of North American markets, subsidies are significantly higher today and we think that's going to attract additional investor dollars.

Q: What kept you from moving into Europe earlier?

A: As a small company, it's important to focus and we thought it was very important to solidify our product here in North America and to use a more mature product moving into Europe. In Europe, companies are not as willing to try things that aren't trusted or participate in beta programs and they expect a high level of support, so to say that I would fully support them from North America would not be very convincing. Now we have the resources to establish ourselves on the ground in Europe, with field services and account-management support.

Q: Where are you considering expanding initially?

A: We will certainly start withsolar-electric as our initial entry, and we have existing customers getting established in Spain, so that's very likely to be our first entry point into Europe. We're looking for highly investor-driven markets and markets attracting new investors because our products are intended for customers managing 15 or more systems distributed across a geographic area. Our customers, who have as many as 100 sites under management with us, have realized that once they get a certain amount of systems, it no longer works to use a spreadsheet.

Q: Are there technical challenges in applying your software to European systems?

A: We already support 70 to 80 percent of the devices being installed in Europe -- the inverter devices specifically -- so we actually have several systems installed in Europe today. Even though we have no sales or marketing efforts in Europe, we are receiving calls about our products and do have several installations now, including in Spain and Portugal.

Q: Can you tell us more about those installations?

A: I'm not ready to disclose those today. I can tell you that some of our existing North American customers are moving into sunny parts of Europe. In many cases, these sales are related to existing sales with manufacturers, who call and ask if we can support them in Europe.

Q: Do you anticipate any issues with different country policies, if customers have systems spread out across Europe?

A: The third-party hardware that we use as a platform to collect data is [approved throughout the European Union], so permitting is not an issue. From our perspective, what's important is the focus and I think to get established in Europe, it's important to focus on a very targeted market in a specific country. … We're certainly not going to say 'Now we're open for business in all of Europe." We're going to pick targeted markets and build our success there. … At the same time, I very much expect our customers will pull us into other regions and other technologies, such as solar hot water.

Q: Some analysts have warned that energy management could prove a difficult market in which to differentiate technologies. Is that a challenge Fat Spaniel is facing?

A: No. In the short term, what has been driving demand for Fat Spaniel specifically is because it's a very fragmented market, many of the devices have different protocols. If you're a manufacturer of solar inverters, it's unlikely you're going to develop products that talk to competitors' products or that apply to different segments. We have been able to cross many of those boundaries.

Q: Some analysts have suggested that growing quickly might be the best strategy. Is that what Fat Spaniel is trying to do here?

A: We want to become sustainable. That's not necessarily about growing quickly, but about becoming efficient, reliable and making sure our solutions are in fact economic and scaleable. … People are really interested in being able to collect data across portfolios. Long term, we see financial markets really driving the value of that data. And when you think about a project with a 20-year power-purchase agreement, you certainly wouldn't want to put that data in the hands of a company that's not going to be around for 20 years. This financing helps us ensure the life of the company over the long term. We think that puts us at a very strong advantage.

Q: What's next for Fat Spaniel?

A: We see a long-term opportunity to be the verifier of the creation of [commodities such as renewable-energy credits and] carbon credits. The ability to independently collect data, aggregate it and provide it to the markets in a standard way is going to be critical in order to enable those commodities. We already have a product that calculates or measures the performance behind a renewable-energy credit, because it measures in kilowatt-hours or megawatt-hours. Carbon offsets in North America are voluntary, but by measuring the amount of energy produced or saved by a system and comparing to a baseline, we have all the pieces needed to create carbon offsets.

Q: Are you working on a product that specifically targets the REC and carbon-credit markets?

A: We have several efforts in that area that we are not ready to announce.

Q: Are you planning to raise any more money?

A: Ultimately, if I had my druthers, this would be my final fund raising. The goal is to be cash-flow positive by Q2 or Q3 of 2009. There may be another reason to raise money to grow more quickly or to expand into other markets, but we certainly have a plan to become sustainable over the long term with this investment.