In most nascent sectors, especially in emerging and frontier markets, much of the risk premium is the price of missing evidence, not a flaw in the businesses.

Early in a market, investors have few comparables, short operating and exit records, and no shared benchmarks. A cautious premium is a rational response to uncertainty, not a misreading of the market. As evidence accumulates, uncertainty becomes measurable risk, and capital is priced with more precision rather than more optimism.

The building block method makes this disciplined. It decomposes required return into four parts: a risk-free rate, a country premium, a sector premium, and a business-specific premium. Each should pay only for risk that arises at that level, revealing where uncertainty actually sits instead of letting one headline number absorb every unknown.

The same discipline applies in any sector. What looks like one risky market is usually several business models with different economics. A single premium fits none of them, a resolution problem, not a verdict on whether the businesses work.

Clean cooking shows this. A metered LPG provider earns recurring payments, tracks each customer digitally, and can show how past cohorts repaid, giving real evidence to price. An early biomass stove seller makes a one-off sale and keeps little repayment history. The first carries measurable risk; the second is mostly unknowns. Judge each on its own evidence, not on a single sector label. Those who build that evidence edge earliest see value first.