Seeing Through the Noise
Investing Beyond Simple Metrics
In science, Occam's Razor teaches us that the simplest explanation is often correct. But in startup investing, particularly in Africa's dynamic markets, this principle might do more damage than good.
When evaluating startups, we naturally gravitate toward simplicity:
The polished pitch deck
The founder with a prestigious pedigree
The hockey-stick growth charts
The oversubscribed funding rounds
These signals are easy to process, compelling to share with investment committees, and seemingly indicative of success. They offer a clean narrative that fits neatly into our mental models.
But what if the simplest signals aren't the right ones?
The Complexity Behind African Success Stories
After deploying capital across multiple African markets, I've observed a pattern: the most successful investments often defy simplistic evaluation frameworks.
Consider the fintech that showed modest growth but perfect unit economics in a market where competitors were burning cash for unsustainable acquisition. Or the logistics startup facing significant regulatory headwinds but possessing unmatched local market knowledge that eventually became their moat. Or perhaps that unassuming Edtech with limited funding but extraordinary user retention metrics that signals product-market fit beyond what glossy competitors could achieve.
These examples illustrate a critical truth: in emerging markets, success often comes packaged in complexity.
The True Signals Hidden in Plain Sight
African markets, with our rich diversity and evolving ecosystems, demand that we resist overly simplistic evaluation metrics. The signals that truly matter often hide beneath the surface:
Cultural fit with target markets and understanding of local consumer psychology
Adaptability to infrastructure constraints that might seem impossible to outsiders
Resilience through regulatory challenges that change with political landscapes
Innovative distribution models that defy conventional Western playbooks
Capital efficiency born from necessity rather than choice
When we default to simplified metrics – particularly those imported from Silicon Valley – we miss the complex interplay of factors that determine success in markets where the playbook is still being written.
The Hidden Cost
This shortcut – choosing the cleanest, most presentable data points – isn't just intellectual laziness on our part, it's leaving money on the table. It explains why many high-potential African ventures remain unfunded while "safer bets" secure round after round.
Moving Ahead
Breaking free from defaulting to this bias requires conscious effort. It means spending time in markets rather than boardrooms. It means developing evaluation frameworks specific to each ecosystem rather than applying universal metrics.
It means acknowledging that sometimes the messiest opportunities hide the greatest potential.
Next time you evaluate an African startup, challenge yourself with this question:
"Am I choosing the simplest explanation because it's accurate, or because it's comfortable?"
Our ecosystems deserve investors who embrace complexity rather than avoid it. The most valuable opportunities rarely present themselves in the cleanest packages.
Where might you be missing signals by clinging to oversimplification?