LONDON – Just one month after the official start of fund raising, Paradigm Ventures, the brainchild of Esprit Telecom founder Michael Potter, in March raised $100 million to invest in European fast-growth, high-tech ventures.
Mr. Potter is to step down as president and vice chairman of Esprit to run Paradigm, following GTS’s December acquisition of Esprit Telecom, the fastest-growing telecommunications group in Europe. Paradigm was set up in conjunction with “a number of other people,” but Mr. Potter did not name them.
Paradigm’s sector focus on telecommunications, the Internet and e-commerce, as well as its investor base, reflect the firm’s pedigree. Paradigm Ventures, which brings together 10 investors in North America, has raised the bulk of its capital from prominent individuals in the telecommunications, computer and software industries.
“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,” Mr. Potter said. The United States-based 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 Mr. Potter describes as “a real hole in the current European venture capital market.”
The firm will invest in post-start-ups, targeting high-tech, fast-growth, revenue-generating companies with international strategic plans that need management assistance and financial backing. “We aim to help put systems and procedures in place to build a growth-sustaining structure for investees,” Mr. 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 recruiting local management teams.