Do traditional valuation models fail in early-stage markets?

Most investors still use models that don’t work in early-stage markets.

NPV, IRR and DCF are essentially useless in pre-PMF environments because they assume stable causality where none exists.

The biggest mistake I see is applying industrial-era logic to innovation-driven markets.

In reality, early-stage markets behave differently:
– no reliable data
– shifting demand
– outcomes driven more by behavioral signals than historical metrics

I spent 25 years building a causal-adaptive framework (CAEM-B2B) to analyze B2B markets under these conditions.

Background: PhD economist, former industrial founder, later investor evaluating hundreds of early-stage companies and market entry strategies.

Not trying to sell anything genuinely curious:

How do you evaluate opportunities where traditional valuation models break down?

Do you rely more on narrative, signals, founder quality or something else?