Clermont Auvergne scored 36 unanswered second-half points at Sandy Park to go back to the top of Pool Five as the competition's newcomers surrendered a 12-10 interval lead.
Baxter said: "At half-time I thought we were doing pretty well but I was also sitting there thinking reality-wise are we going to rue missed try-scoring opportunities from the first half and ultimately we did.
"I am not going to run away from the fact that lots of what we did in the game was good.
"I had said to the players that we wanted them to brave and that we want them to play from everywhere, making it as much as possible with the ball in hand.
"We did that fantastically well for probably 50 of the 80 minutes but for half an hour there was far too much coming in the other direction.
"When we shake it all down and we will rue the missed tries when we had the momentum. We will also look at how we failed to stop their momentum almost from the start of the second half.
"They are a good side and when they had that momentum, they took the game away from us.
"They were more clinical than us, we went a little bit soft defensively and we paid the price.
"As far as I am concerned, the Heineken Cup is a massive challenge for us but it is about challenging ourselves and we will be better for it.
"We are going to go after the two Scarlets games in a couple of months time absolutely flat out.
"For us that is what it is all about; it is about experiencing things, learning to be a better side and learning of the teams we play against."
Clermont Auvergne head coach Vern Cotter said: "Once we started going forward and completing phases we got confident and we knew that we had to score tries.
"The idea was to get out there and score as many tries as we could and we got there.
"I think it is good for the players to come from a situation and turn the tables just because apply themselves and use their strengths. Hopefully it will give us the confidence for the rest of the competition.
"I think we surprised them. They had a yellow card [five minutes before the break] and we wanted to make the most of that.
"We were a lot different than we were in the first half and they probably got tired.
"I think we bettered them a bit in defence, even though I would have preferred that we bettered them in attack, and we managed to find space."
When the competition returns in December the Frenchmen have back-to-back games against reigning European champions Leinster - who beat them in last season's semi-final.
Cotter added: "We have got the first part of the Heineken Cup out of the way and next week we go back to Top 14 with a home game against Biarritz.
"We'll just try to work our way through the Top 14 and look to gain Heineken Cup qualification.
"We came very close last year and we would like to come close again, and I think that was the driving factor for us in this game."
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