The Capital Asset Pricing Model (CAPM) is a widely used financial tool for estimating the expected return on investment, taking into account its systematic risk about the overall market. CAPM plays a crucial role in startup valuation by providing a systematic and quantitative approach to determine the cost of equity capital. This is essential for calculating the present value of a startup’s future cash flows. The importance of CAPM lies in its ability to incorporate the inherent risk associated with investing in startups, especially in their early stages, where uncertainties and volatility are heightened. CAPM aims to assist investors, entrepreneurs, and financial analysts in evaluating a startup’s required rate of return, factoring in the risk associated with its operations. This methodology is particularly essential in early startup stages across various industries, including technology, where traditional valuation models may not fully capture the unique risk profile of innovative ventures. By providing a structured approach to estimating the cost of equity, CAPM aids in setting realistic expectations, facilitating informed investment decisions, and contributing to a more comprehensive understanding of a startup’s valuation, particularly when financial data may be limited or speculative.