# #1 By [aswin](https://paragraph.com/@aswin) · 2022-02-13 --- Welcome to the first edition of whatever this is. Firstly, thanks a ton for agreeing to be my hamsters in this experiment. Okay, so let’s get started with what’s got most of privileged India excited these days - Shark Tank! Shark Tank is a good show imo and is bringing awareness to the masses but if you’re on Twitter and spend a lot of time there, you may have already been acquainted with most of what’s going on. In this first edition, we’ll break that down further.   So what is a startup and what is a business?  Startups used to be any company that had been recently formed.  But would the cafe around the corner from your house be a startup? No.  But what makes Third Wave a startup then?  While the definition of a startup is subjective to some extent, I believe that largely when any young business can achieve scale or has plans to do so with tech and tech is the hero of their story, that’s a startup.  That said, since businesses have to make money from day 1 to support Ops, they may have sorted playbooks to go towards profitability in comparison to a startup and at the end of the day, profits matter so if you’re a budding entrepreneur, you don’t necessarily have to bring tech into everything. Just follow Michael Scott’s legendary advice -  ![](https://storage.googleapis.com/papyrus_images/a66af4ee2e03178275993ae0fa0e48494074339b35394f9092e04c1d1af426fa.jpg) Now, rewatch Shark Tank India and keep your ears primed to hear Ashneer call a startup a _dhandha_ and see if that company is a startup or a business.  Moving on, why take money from other people and WTF is a Seed round and why is the next one a Series A and not a Plant round? You may need money to build the product or to market it and distribute it to grow faster. Beyond these 2 reasons, you really don’t need to raise funds. A **seed round** is traditionally the first round of financing you raise and that may be from friends and family, early believers and angels. VCs traditionally did not participate here but the times are-a-changin, my friend. **Series A** is traditionally the first round of funding that comes from institutional investors. Again this has changed in recent years and if you’re looking for a job in a startup that you can justify to your parents + build your muscle to take up risk and responsibility, a Series A funded startup is where you should go. But bhai, yeh Series A kyun hai? Seed ke baad cars wala naming structure is a bit odd, no? Yep. But again, Series A is when the institutional investors came into the picture traditionally so the etymology has significance here.  Series A comes from the classification of shares that have enhanced benefits when it comes to dividends, exits, voting rights, etc. Now of course, it’s just to signify the stage of the round but this is why we don’t have Sapling, Plant and Tree rounds after Seed.  The third piece that you’ve heard a lot about on Shark Tank is about **valuation**.  Valuation, simply, is a consensus between the investors and founders on the value that the startup brings to the world in quantifiable, monetary terms. How is valuation decided? It’s a multiple of your current revenue more often than not. For super early stage startups that of course is a challenge so it’s also a trade off between how much money the startup needs and how much the investors are willing to pay for it.  We’ll dive into the different financial instruments used in a round and how valuations work exactly later but as a basic intro, this is where unitary method (from Class 2) really comes into effect. If you invest INR 10 Lacs for 10% of the company, the valuation of the company is INR 1 Cr. How? Since you, as an investor, valued a tenth of the company at INR 10 Lac, the whole portion is now worth INR 1 Cr. Yes, it’s that simple.  ![yes, i know the quality sucks.](https://storage.googleapis.com/papyrus_images/1193bbf1e9f692e4461ad719b0e65e6af9b3a9939db8b6503968e263c2ec547b.jpg) yes, i know the quality sucks. That’s it from this edition. Please do send in feedback + tell me what you’d like to read about next. Till then, **K.I.S.S.** --- *Originally published on [aswin](https://paragraph.com/@aswin/1)*