Esprit’s Founder Creates Paradigm Ventures

At its official launch on 1 March, Paradigm Ventures, the brainchild of Esprit Telecom founder Michael Potter, will have $100 million (euro 90 million) available to invest in European fast growth high-tech ventures, thanks to what must surely have been one of the shortest offer periods on record. Formal fund raising for Paradigm, kicked off on 1 February this year.

Following GTS’s December acquisition of Esprit Telecom, the fastest-growing telecommunications group in Europe, Michael Potter is to step down as president and vice chairman of Esprit to run Paradigm; he confirmed that Paradigm was set up in conjunction with “a number of other people” but did not name them.

Paradigm’s sector focus – on telecommunications, the Internet and e-commerce – reflects the company’s pedigree, as does its investor base. Paradigm Ventures, which brings together ten investors, has raised the bulk of its capital from prominent individuals in the telecommunications, computer and software industries in North America. “While our investors have excellent technological understanding of their sectors and have been highly successful in their home market, they are less familiar with the European environment and were attracted by the entree that Paradigm offers”, Michael Potter said. The US-domiciled vehicle is structured as a Limited Liability Company.

As a venture-backed entrepreneur himself – Esprit Telecom raised funding from Apax Partners – Paradigm’s founder is well placed to understand the kind of support ambitious technology-based enterprises require from their venture backers. Paradigm plans to draw on the industry experience of its founders to fill what Michael Potter describes as “a real hole in the current European venture capital market”. The firm will invest post start-up, targeting high-tech fast-growth revenue generating companies with international strategic plans that need management assistance as well as financial backing. “We aim to help put systems and procedures in place to build a growth-sustaining structure for investees”, Michael Potter explained. The type of enterprise Paradigm will address is likely to have substantial funding requirements, and the fund will therefore be prepared to provide as much as $5 million to a portfolio company.

Paradigm will invest throughout the European Union but will only consider opportunities in Central or Eastern Europe in “extraordinary circumstances”. The firm will operate out of London and Amsterdam and is in the process of recruiting local management teams.