The street light effect

1 min read · March 20, 2026
New Power Labs

Imagine you lost your wallet in a dark alley. Where would you search first: where you dropped it, or under the streetlight where you can see? 

The streetlight effect, widely referenced across disciplines, describes the tendency to look for answers where information is easiest to access, rather than where the answer is most likely to be.

In capital allocation, decision-makers often rely on signals that are easiest to evaluate: standardized metrics, visible traction, and familiar founder profiles.

But what is easiest to measure is not always where the greatest potential lies.

Some of the most promising opportunities may sit in the alley away from light, just beyond where we have learned to look.

Narinder
New Power Labs

Like what you’re reading? Subscribe to get weekly Equity Shots in your inbox.