Founders edition vs aftermarket: Founders edition VS aftermarket? : buildapc

Founders Edition vs Aftermarket: What Should You Choose?

WindowsTips & Tricks

Edon LazajAugust 12, 2021

0 1,321 3 minutes read

Graphic cards play a crucial role in boosting computing experiences. However, have you ever felt overwhelmed as there are numerous types of graphic cards out there? If yes, you are not alone. A lot of tech enthusiasts are on the same boat with you, let alone the unprofessional.

But do not panic, we will help you narrow your multiples options down to only two potential candidates: Founders edition vs aftermarket.

Let’s walk through the end of our post to see which one will best fit your demands.

What Is Founders Edition?

Perhaps the Founders Edition is still a new term for a lot of users. Actually, Founders edition is a type of graphic card developed by Nvidia- a company specializing in developing and producing computer components.

When launching a new line of GPUs, Nvidia will introduce it in a complete graphics card, often called a standard card, or reference card. This allows their media partners to experience real-world performance and manufacturing partners to develop their own version. RTX 2060, RTX 2070 are some of the typical models belong to Founders Edition.

To be more specific, the Founders Edition has a video connector that includes three DisplayPort 1.4a, an HDMI 2.0b, and a USB-C debugger for VR headsets. This card is characterized by the PEG power connectors with a 6 + 8 Pin configuration on the back of it.

Founders Edition receives trust and love from most users because of its convenience. Those cards will definitely be sold earlier than the custom versions, so instead of spending weeks or months on waiting, you can possess it right in your hand!

Moreover, the squirrel-cage heat sink, which directs hot air to the back of the card, is another plus point that we should not miss. This overall cooling design may not be as effective as the custom heatsink, which can release the heat directly into the surrounding environment.

However, it is very suitable for multi-displaying systems. If you intend to run SLI, Founders Edition will help you control the system’s temperature with ease.

How About Aftermarket?

Aftermarket graphic card is also a good choice. Basically, it bears a significant resemblance to Founders Edition but still has some specific advantages. Let’s start by reviewing the best aftermarket GPUs.

ARCTIC Accelero Xtreme IV

The Arctic Accelero is considered as one of the fastest thermal GPU coolers. To be more specific, Arctic Accelero IV keeps the GPU’s heat level under control, ensuring that the three-ventilator cooling system doesn’t overheat your GPU.

Furthermore, one of the main characteristics that make this product a real innovation is its near-silent performance, though it is equipped with a tri-fan cooling system. Contrary to what you might think, the cooling level is not noisy, even a bit.

Moreover, this high-performance air cooler is also known for its inexpensive price. If you are on a tight budget, ARCTIC Accelero Xtreme IV will be a perfect choice.

NZXT Kraken G12

The NZXT Kraken G12 is a real beast that you should not miss! Incredible as it may sound, this product can be connected to about 30 separate coolers. This offers multiple choices for consumers while selecting the AIO cooler to add to their GPU. Now, you will no longer have to worry whether the cooler is compatible with the computer or not.

However, in return, you have to pay the high price if you purchase the Kraken G12 mounting kit for your AIO GPU cooler. Though NZXT produces a high cooling level, the price can cause people to hesitate about the product.

Founders Edition vs Aftermarket, Which is the better?

To our advice, we highly recommend the Founders Edition. There are plenty of reasons to explain why. The first reason is that it is produced and developed by Nvidia- a trustworthy name in this field.

With its Founders Edition Cards, Nvidia chooses the most reliable GPU models, supplying them with an edge over the standard reference setup. Founders Edition cards have higher speeds than the reference requirements. Moreover, the founder editions provide a useful solution for air cooling.

What makes it become the ideal choice is its pricing, which means you can save some money by purchasing a reference card. Besides, the Founders Edition’s designs are the base model for a design of graphics cards, while the aftermarket version became more expensive with no change in design.

Final Thoughts

Hopefully, this post has given you some first-hand information about Nvidia Founders Edition vs Aftermarket, and which type of graphic card should you choose to boost your computer’s performance.

As you can see, choosing the ideal graphic card is not as hard as you have imagined. We believe that after reading our post, you will find this job a piece of cake!
Thank you and see you next time!

Learn More:

• What Hz Monitor Should I Pair With A RX580?
• How much is my custom PC worth?

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Nvidia RTX 3080 Founders Edition

Details

Category: Video Cards

Published: Wednesday, 16 September 2020 09:01

• Nvidia RTX 3080 Founders Edition

• Packaging

• Card Layout and Photos

• Test Rig and Procedures

• Synthetic Benchmarks

• VR Benchmarks

• In-Game Benchmarks

• Compute Benchmarks

• RTX and DLSS

• Cooling, Noise, and Power

• Overall and Final Verdict

• All Pages

Page 1 of 11

Nvidia’s announcement of their new Ampere based RTX 3000 series of cards couldn’t have gone better for them. They ramped up the hype leading up to it for a month and even with countless leaks, they still managed to surprise everyone with both their performance estimates as well as the pricing. The combination almost instantly tanked the used card market as well, given estimates that put their RTX 3070 right with or above the RTX 2080 Ti which has been the top dog for gaming for two years now. Then you have the RTX 3080 and the RTX 3090 which show a big performance jump over the previous generation and for once pricing didn’t go way up. The RTX 3080 is coming out first and launches tomorrow, but before store availability, we get to take a look at the RTX 3080 Founders Edition and see why it is such a special card and put it through our test suite to see how it performs.

Product Name: Nvidia RTX 3080 Founders Edition

Review Sample Provided by: Nvidia

Written by: Wes Compton

Amazon Affiliate Link: HERE

 

Ampere

With Nvidia’s announcement, a LOT of information on Ampere has already been made available so there isn’t a huge need to deep dive things at this point. But for those of you who haven’t been paying attention I did want to do a short rundown on what Ampere is, a few of the software things Nvidia has announced, and where the RTX 3080 fits into the lineup as well as how it compares to past cards.

To start things off, Ampere is the name of Nvidia’s architecture used in the new 3000 series of cards and Ampere is the successor to Turing which was used in the 2000 series of cards. This isn’t just a die shrink, although it is built using a custom Samsung 8 nm process (for the GA102 at least) where Turing was built by TSMC at 12 nm. This is the second generation of RTX and the third generation of the Tensor core (it was used in Volta which didn’t have a gaming launch). With the new architecture, Nvidia has their new shaders getting 30 TFLOPS vs the first generation of RTX cards which were 11 shader TFLOPS. The ray-tracing core has similar increases by jumping up to 58 ray tracing TFLOPS vs 34 TFLOPS before. Then the tensor core which has even more of a performance jump, going from 89 TFLOPS to 238 TFLOPS.

With these, Nvidia was excited to push just how big of a jump that the new cards are over the previous generations in both performance and pricing which in their presentation they used a nice price to performance graph to show using launch prices. The RTX 3080 that I will be looking at is priced right with the RTX 2080 SUPER and the GTX 1080 Ti but is significantly higher even anything from past generations including the RTX 2080 Ti.

So the diagram below is a break down of a single Ampere SM which each of the new Ampere cards has multiple. You can see each SM has a new 2^nd gen ray tracing core that takes up a lot of space on the die. Then everything else is split up into four partitions or processing blocks. These are broken up even farther now with one new 3^rd gen Tensor core, one floating-point 32 datapath and one float point (FP32 or integer 32 datapath. This is a big change from Turing which had one data path for floating-point and then another for integers. Now floating point 32 can be handled at double the rate, which is what most 3D rendering uses. This is where they see that big jump in floating-point TFLOPS. A big improvement in ray tracing performance is seen now with each SM being able to process ray tracing and graphics/compute workloads to be able to work at the same time. The second picture is the full diagram of the RTX 3080 which has six GPCs that have 12 or 10 SMs inside.

So for specifications, I have included the RTX 3080 alongside of a few different Nvidia cards for comparison. I have the RTX 2080 Ti and the RTX 2080 SUPER from the last generation and I have also included the GTX 1080 Ti as well because I believe that a lot of die hard GTX 1080 Ti owners will be looking closely at the RTX 3080 to see how they compare. Running through them you can see that they all have the same GPC layout of 6 but the SM counts differ. The 2080 Ti is similar to the 3080 with its 68 SMs but just look at the jump in overall CUDA cores which has the RTX 3080 at 8704 which is double the RTX 2080 Ti. The number of tensor cores is down significantly from the RTX 2080 Ti and even the RTX 2080 SUPER so it will be interesting to see how the new improved tensor cores perform. Clock speeds for the RTX 3080 are higher than the 2080 TI with the boost clock running at 1710 MHz but the RTX 2080 SUPER was higher at 1815 MHz. The smaller manufacturing process has the overall transistor count WAY up as well with the RTX 3080 at 28.3 Billion with the RTX 2080 Ti at 18.6 Billion and 13.6 Billion for the RTX 2080 SUPER. But the overall die size is smaller than the RTX 2080 Ti.

On the memory side of things, the big change is the move from GDDR6 on the Turing cards to GDDR6X which uses less power and runs at a higher clock speed. Nvidia has the 3080 running at 19 Gbps compared to the 15.5 Gbps of the 2080 SUPER and 14 of the 2080 Ti. The 1080 Ti is looking especially slow with its GDDR5X running at 11 Gbps. The 320-bit memory interface is a little less than both of the Tis and more than the RTX 2080 SUPER. The memory capacity is also not a huge jump as well with the 2080Ti still having more as well as the 1080 Ti but 10GB is more than the 2080 SUPER had. Even without going up to a 352-bit memory interface the memory bandwidth with the faster memory Is up there at 760 GB/sec.

Specifications	GeForce GTX 1080 Ti Founders Editon	GeForce RTX 2080 Super Founders Edition	GeForce RTX 2080 Ti Founders Edition	GeForce RTX 3080 10 GB Founders Edition
GPU Codename	GP102	TU104	TU102	GA102
GPU Architecture	Pascal	Turing	Turing	Ampere
GPCs	6	6	6	6
TPCs	28	24	36	34
SMs	28	48	68	68
CUDA Cores / SM	128	64	64	128
CUDA Cores / GPU	3584	3072	4352	8704
Tensor Cores / SM	N/A	8 (2nd Gen)	8 (2nd Gen)	4 (3rd Gen)
Tensor Cores / GPU	N/A	384 (2nd Gen)	544 (2nd Gen)	272 (3rd Gen)
RT Cores	N/A	48 (1st Gen)	68 (1st Gen)	68 (2nd Gen)
GPU Boost Clock (MHz)	1582	1815	1545	1710
Frame Buffer Memory Size and Type	11264 MB GDDR5X	8192 MB GDDR6	11264 MB GDDR6	10240 MB GDDR6X
Memory Interface	352-bit	256-bit	352-bit	320-bit
Memory Clock (Data Rate)	11 Gbps	15. 5 Gbps	14 Gbps	19 Gbps
Memory Bandwidth	484 GB/sec	496 GB/sec	616 GB/sec	760 GB/sec
ROPs	88	64	88	96
Texture Units	224	192	272	272
L2 Cache Size	2816 KB	4096 KB	5632 KB	5120 KB
Register File Size	7168 KB	12288 KB	17408 KB	17408 KB
TGP (Total Graphics Power)	250W	250 W	260 W	320W
Transistor Count	12 Billion	13. 6 Billion	18.6 Billion	28.3 Billion
Die Size	471mm2	545 mm2	754 mm²	628.4 mm2
Manufacturing Process	TSMC 16nm	TSMC 12 nm FFN (FinFET NVIDIA)	TSMC 12 nm FFN (FinFET NVIDIA)	Samsung 8 nm 8N NVIDIA Custom Process

 

Beyond the architecture changes and the new cards that Nvidia announced. They also paired those up with a few software and driver level changes that they were excited to talk about. The first was what they call Nvidia Reflex which Nvidia isn’t the first to focus on. Basically, in esport titles especially latency is important. Which is part of the reason for the big push for high refresh rate monitors. Nvidia has combined their G-Sync technology along with high refresh rate monitors as well as a few other software tweaks to focus on cutting down latency in these titles. They showed off the amount of difference they see by comparing with the average system latency. They have opened up an API for games to be able to measure rendering latency and to lower the render queue. The end result is a big improvement in specific games where latency is more important than in others.

The next addition was Nvidia Broadcast and this is one that plays a role in my current setup. I have been using Nvidias RTX Voice to cut out background noise when using my desktop microphone and it does an amazing job, even though it does have a few big bugs. Well, Nvidia has expanded on that idea to tie in AI-powered broadcasting help all into one program. The microphone and speaker audio noise removal is still there. But they now also have added video support. A lot of streamers use software to cut out backgrounds but the idea here is to use the built-in Tensor cores in the RTX video cards to take the load off your CPU. In addition, because it is AI they can do more detailed predictive effects. It can also be used to auto frame you as well for when you move around. Nvidia is trying to help streamers and now with COVID is also can help with people working or learning from home.

RTX IO is one of those announcements that real geeks were foaming at the mouth for, but the average gamer or user isn’t going to know what is so exciting about it. Ironically this is similar to one of the big features for the upcoming PS5. RTX IO is basically leveraging the power of your GPU to help speed up file transfers and loading. This again cuts more work away from your CPU and it also allows for a more direct path for data to go right into the GPU memory rather than through the CPU then back out to the GPU. Maps can load faster and they are using a lossless decompression that can also lower game sizes in general. Right now RTX IO is capable of decompressing even faster than the limits of Gen4 SSDs. This isn’t coming just yet, Microsoft will be bringing DirectStorage out next year and at that time RTX IO will be available.

Lastly, before diving into the RTX 3080 itself I wanted to include a copy of our GPUz which shows which firmware that we are running at and confirms that nothing weird was going on for card spec. This is especially important when it comes to pre-launch samples like this. You can also see which driver I tested on, which was the pre-launch press driver.

 

• Nvidia RTX 3070 Founders Edition

• EVGA RTX 2060 KO

Arsagera Management Company Buying shares on the secondary market is an investment in business!

07/22/2022

Section: Why do we need a stock market?

It is widely believed that buying shares has nothing to do with owning a business. In this article, we will try to answer the question: is buying shares on the secondary market an investment in a business and how does it affect the business?

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Imagine: a company of people gathered and decided to play cards for money. No new money was created during the game. There was simply a redistribution of money from one player to another. Although the one who won, believes that he has earned. Approximately the same thing happens in casinos, sports sweepstakes, in the derivatives market and forex. The only difference is that part of the players’ money goes to the organizer in the form of a commission.

What’s going on in the stock market? People come there with the money that they somehow and somewhere have earned, buy and sell shares, they also pay commissions to the stock exchange and brokers, and the money is redistributed between them. Buying shares on the secondary market (that is, from the previous owner) does not bring any money for the company itself. What’s the Difference? Many are not even interested in what the company whose shares they buy is doing. It is widely believed that buying shares has nothing to do with owning a business. We will try to answer the question: is buying shares on the secondary market an investment in a business and how does it affect the business?

When you ask fans of Forex or derivatives market where they got the start-up capital for speculation, it most often turns out that this is a previously received salary. Even if they have borrowed money or are just playing with the money of their friends, this is also a salary, only earned by other people. In principle, the same can be said about those who buy shares. And where did they all get their start-up capital? At work. Even if it is an inheritance or funds from the sale of property, anyway, someone once earned this money. And even if this money is stolen, it is stolen from the one who earned it.

The main employer in the economy is business, that is, companies and enterprises. Some companies are public, some are not. A public company is a company whose shares can be bought by anyone. This is a public joint stock company whose shares are traded on the stock exchange. Non-public companies are all kinds of JSCs and LLCs. In the West, this is quite a common situation, when a person, for example, works in a public company and directs part of the money earned to purchase shares.

Someone will say that our main employer is the state. A huge part of the able-bodied population works in the public service. But government agencies do not create GDP! Their duty is to provide conditions for the creation and growth of GDP. The work of the military, police, employees of various ministries and departments should ensure order and the opportunity to conduct and develop effective business in the country. If we discard pensioners, minors and government employees, it turns out that the activities aimed at improving our standard of living falls on the shoulders of a very small percentage of the population.

Companies whose shares are traded on our stock exchange create more than half of GDP (according to various estimates, 60-70%), so shares are productive assets. And by themselves, bets in a casino or bookmaker, open positions in forex, contracts in the futures market and lottery tickets are not assets based on human labor! The owners of these assets are more correctly compared to the owner of an entrance ticket to a cinema or entertainment center. And it is absolutely absurd to think that they carry out creative activity.

In part, the growth of the population’s income ensures the growth of the stock market. Only, despite the groans and lamentations about low wages, people are not surprised that wages can grow, and their growth, in general, is unlimited. But people doubt that there is no limit to the growth of stocks or real estate.

Consider the following example. The man invested a million in the business. The business works, creates something useful and in demand by people, receives revenue (payment for its work). From this proceeds, he pays salaries to employees and brings profit to the founder (= owner). So far, this business has one owner. All profit earned by the business is his. Whether the owner paid dividends to himself or not does not play a special role. It’s all his money anyway. It is important that the business has earned a profit and the owner can use it as he pleases: to expand the business, consume, or in some other way. Bets in a casino or bookmaker, open positions in Forex, futures contracts and lottery tickets are not assets that pay dividends. Or, in other words, they are not assets that transform «utility created for people» into money for the owners of these assets. And the fact that the dividend yield of shares can be low or even zero does not negate the fundamental difference between these phenomena. In particular, despite the outward similarity of the method of trading, the ownership of a share and a future on this share is separated by a huge gap at the level of «physical meaning».

Let’s go back to our example: this person (the founder) sold the business to another for one and a half million. This «new buyer» now owns it. Of the one and a half million that he paid, a million is the initial investment. And the half million that he paid «from above» — ​​what’s that? This is the measure of business success! And if, for example, a “new buyer” bought it cheaper, then this is an assessment of “failure”.

And yet, who made the money for the founder? «New customer» or the business itself? Imagine a house is being built. With each new floor, the value of the house increases. You bought it when there were five floors, and you sell it to someone for a higher price when ten have already been built. Despite the fact that the “new buyer” pays the difference with the money he earned, it (the difference) is justified by the fact that the house has more floors. It’s the same with business. As it develops and expands, its value rises. And the “new buyer” pays for this increase with his own money. In fact, it doesn’t matter if you yourself built a house or bought an apartment on the secondary market. In both cases, you have invested in real estate. When its value changes, the “new buyer” buys it without wondering how much you have earned on this investment and why he should pay the difference. The same thing happens in the stock market, only instead of a certificate of ownership of real estate you have shares.

In the case of buying a whole business, there is no doubt that the “new buyer”, having bought the business from the previous owner, has made an investment in the business. At this point, our opponents (those who do not consider buying shares on the secondary market an investment in business) usually say: of course, he owns 100%, he is the owner. It is considered that if less than 50% + 1 share is not the owner. That is, if you bought a controlling stake, this is an investment in a business, but if not, how is it?

Let’s continue our story. The «new buyer» decided to expand the business. To raise capital, he held an IPO, as a result of which this business gained 1,000 new shareholders. Let’s say that in this case, the IPO participants own 20% of this company, and 80% belong to the «new buyer». He bought on the secondary market from the founder (that is, he did not invest directly in the business), and IPO participants invested money directly in the business, but do not own a controlling stake.

Unfortunately, thanks to the «people’s IPO» in 2006-2007. the population has formed another negative stereotype. Any acquisition of shares, both during an IPO and on the secondary market, must be evaluated in terms of the price-quality ratio and try to understand at what price it is advisable to do this. The natural motive of any enterprise is to sell its shares in an IPO for as high a price as possible. In this they are assisted by numerous investment bankers. Their commission depends on the price at which they can sell shares to buyers. Often, inflated estimates of the prospects for the future activities of the enterprise are used. In Arsagera Management Company, we in most cases do not participate in IPOs, since the price is very often too high. Most likely, then, sooner or later, the IPO price will be exceeded, but it is wrong to waste this time.

By the way, the ability to directly attract money to a business (which creates useful products, pays taxes, pays people salaries and earns profits for owners) through an additional issue is another important difference between such an asset as shares from the futures market, casinos, Forex and totalizators .

Another argument of our opponents: the law «On Joint Stock Companies» does not directly state that a shareholder is the owner of a company. The shareholder is the owner of the shares, and the share gives the right to (1) management (voting), (2) dividends, (3) part of the property upon liquidation. And what other features stemming from ownership do you need? Come and take home any machine at any time?

Often people confuse the rights of the owner and the rights of the sole proprietor. And if a person does not have the rights of a sole proprietor, then he does not consider himself an owner either. It’s more of a psychological issue.

Yes! Being a sole proprietor is more comfortable and pleasant. In your apartment, you can do whatever you want, but in a communal apartment you have to coordinate your actions with other residents. Sole proprietorship is a huge advantage, but it is also a disadvantage. It is much more difficult to run a large scale business alone.

The principles of operation of a joint-stock company are just tailored to the joint ownership of a business by a large number of shareholders of various sizes. This is a legal construction that has evolved over hundreds of years and has absorbed the experience of a huge number of different business situations. Neither large nor minority shareholders have ideal protection of their rights. But so far this is the best thing that mankind has managed to come up with for the implementation of joint projects and the pooling of efforts and resources of a large number of people.

It is pointless to deny the fact that by owning a different number of shares, people can have different influence on the company’s activities. And that’s okay! Another thing is that there may be abuse by large owners. But this does not exclude minority shareholders from the composition of business owners. A larger share of shares is an opportunity to make a decision that will apply to everyone, and not a decision in your favor. As in the HOA, the tenants decide to send money, for example, to the improvement of the playground, and not to repair the entrance. Someone who doesn’t have kids might not like this solution, but it’s a solution for everyone. But the decision to send money, for example, to repair private apartment No. 13, where the chairman of the HOA lives, will be a clear abuse.

Here, once again, it must be admitted that the stock market regularly encounters situations where major shareholders and management abuse their rights. By the way, we are constantly assessing this situation as part of a study of the quality of corporate governance (CG) for the majority of market companies circulating on the stock market, and we calculate a family of indices based on the quality of CG. It is pleasant to note that year by year the quality of Russian companies’ corporate governance is improving.
In this regard, I would like to draw attention to such a paradox. The information and news of the stock market, which is distributed by the media, is very often all kinds of negative: scandals, scams, abuses. Inexperienced observers may get the impression that the stock market is a very bad place and it is not clear why it has not been closed yet.
Pay attention, a similar situation develops with traffic news. These are accidents, catastrophes, deaths, offenses, etc. etc.
If you imagine a person who does not know what roads are for, but only listens to the news, then he, too, will probably have a similar thought: roads are a terrible place that must be closed as soon as possible and stop all these outrages.

The possibility of buying, or rather the possibility of selling shares on the secondary market, is a huge advantage that was invented by mankind. This is the mechanism that allows the business to live. Imagine a situation where there is no such possibility. The founder created a business, developed it, made a profit, and then decided to retire. If he had not been able to sell his business, he would have to be liquidated. Why liquidate a business that benefits? Shares allow you to sell the business not entirely, but in parts. The number of people who are ready to buy a part of the business for «small» money is much larger than people who are ready to buy the whole business, therefore, by selling the business in parts, the first owner can do it at a more interesting price. The life cycle of a business will be limited to the period of its «usefulness» to people, and not the period during which its first owner is ready to deal with it. By the way, the quality of life of people also depends on this possibility. Imagine an automobile production that depends on how long its owner is willing to do it. Would you like to buy a car from a company that may close for reasons depending on the owner’s personal life situation?

The higher the liquidity of the secondary market of company X, that is, the easier it is to become an owner of its shares and the easier it is to cease to be an owner of its shares, the better for everyone. By the way, the liquidity of the secondary market is one of the many factors that determine the value of the company itself.

Of course, by making every minute speculation with shares, a person does not consider himself an owner. In fact, this is a purely psychological problem ─ to consider or not to consider yourself an owner. The speculator still becomes the owner and invests in the business. Let it be just for a few minutes. As a result of these transactions, part of the money of other participants passes to him or from him. At short intervals, the amount of money that is carried over is determined by short-term fluctuations in supply and demand. But over long time intervals, seemingly chaotic fluctuations form a picture in which the dependence between the value of the company’s shares and the economic performance of its activities is very clearly visible.

Let’s consider one more degenerate case. Imagine a company owned by a group of 1000 speculators and their number does not change. All of them are desperately speculating and own shares from a few minutes to several days. And the company at this time works by itself and shows good results. Let’s say that in 3 years its value doubles. For each of this thousand, you can calculate the total time of ownership of a certain block of shares, and it will be rather big, although they did not consider themselves owners. The result of the change in value will also be distributed among these participants in a certain proportion. By the way, some of them will even receive dividends. Some of them, of course, will consider that they have earned their minds at the expense of others, less experienced and fortunate. But their collective result will still not be able to exceed the result that the stocks showed during this period. Moreover, this collective outcome will be worse because of the costs. The amount of costs depends on the activity of «our» speculators: the number of transactions, «shorts», «shoulders», stop losses, take profits, etc. In theory, if they speculate very «diligently», a situation is possible when they ALL will lose. And the entire result that the business showed in the form of an increase in the value of shares will go to brokers and the exchange in the form of commission and interest.

• The secondary stock market is an excellent vehicle for the viability of an efficient business.

• Buying shares in the secondary market is also an investment in a business, despite the fact that the business itself does not receive money.

• The secondary market determines the company’s ability to raise money from an IPO for development. In addition, the secondary market allows the company itself to buy back shares, which in its physical sense is very close to the payment of dividends.

• Secondary market liquidity affects the value of a company’s shares.

• The value of the business itself is given by the money that the business has paid people in the form of wages, dividends, share buybacks in the secondary market. Everything, the circle is closed!

Graph from the material «Why do we need the stock market».

How to distinguish an SPO from an IPO — Otkrytie Investments on vc.ru

Understanding the differences between initial and secondary placement of shares

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IPO (Initial Public Offering) is the process of initial public offering of shares to a wide range of potential investors. It is usually carried out by private companies entering the public field. SPO (Secondary Public Offering) is a secondary placement of securities of a company that has held an IPO earlier. With external similarities — both processes are aimed at raising funds through the sale of shares — primary and secondary placements have significant differences.

IPO — the first public offering of shares

Usually, an IPO is understood as the process of gaining publicity by a private company, when its shares become available to a wide range of investors. The first ever IPO was held back in 1602, when the Dutch East India Company successfully offered its shares on the stock exchange to a wide range of people.

Today, prior to an IPO, a company is considered private, funded by creditor banks, and shares owned by one or more of the founders. During this period, the value of the company can only be estimated theoretically — it does not have a market capitalization. But at a certain stage in the development of the company, more resources may be required — in this case, it is necessary to attract the capital of many private investors by publicly offering them to buy shares.

IPO stages

• Evaluation. Banks responsible for preparing the placement of shares are being selected. There is an assessment of the company and its prospects. Potential sites for IPO are being analyzed.
• Preparation. Meetings are held with potential large investors. Work is underway with the media. Necessary documents are being prepared.
• Underwriting. Banks participating in the preparation for the IPO, as well as large investors, guarantee a certain amount of demand for shares.
• Listing on the stock exchange. An IPO itself occurs when ordinary investors are publicly offered to purchase shares at a certain price.

Rice. 1. The size of the global IPO market. According to: Baker McKenzie

Super loose monetary policy, the growth of promising unicorn companies, and expectations that the global economy will recover are driving a rapid increase in the number of IPOs and their volumes. In the first quarter of 2021, there were 727 IPOs worldwide for a total of $203 billion.

The United States is the regional leader in the number of IPOs.

Rice. 2. Regional distribution of IPO volumes in the world (in %, based on the results of Q1 2021) According to: PricewaterhouseCoopers

Examples of companies that went through an IPO:

• Visa Inc. (March 2008) — even during the global crisis, investors invested $18 billion in the company;
• Alibaba (September 2014) — the amount of funds raised was $25 billion;
• Facebook (May 2012) — raised $16 billion

In addition to them, this procedure was carried out by Apple, Deutsche Telekom, General Motors and many other today’s business giants.

But don’t think that an IPO is a win-win lottery. For the Russian market, a sad example is the popular IPO of VTB Bank in 2007. This happened abroad as well: the most obvious example is the dot-com bubble of 1995-2001 that burst in 2002.

SPO — what does it mean for the company’s shares

If a major investor in a company that has already gone through an IPO publicly sells its block of shares, then this transaction is referred to as an SPO. It is usually carried out by secondary public offering of the company’s shares on the stock exchange. The reason for the SPO is the desire of the investor to turn the potential value of his shares into real money. For the market, this means that the number of shares of the company in free float will increase: its free float ratio will increase.

Since an SPO increases the amount of shares available for sale, the capitalization of the company may decrease. Another disadvantage of the secondary sale of shares is that unfriendly investors can enter the capital. Therefore, the original large co-owners of the company can negotiate limits on the SPO and establish a period when the shares cannot be disposed of on the public market (lock-up period).

A variation of SPO is FPO (Follow-on Public Offering), when a public company sends a new issue of its shares to the market. If with an SPO money goes to a specific investor, and the total number of shares does not change, then with an FPO the money from the sale of shares goes to the whole company, and the shares of its original owners decrease (if they do not acquire new shares).

Rice. 3. The impact of SPO on the capitalization of DraftKings. According to: nasdaq.com

On October 2, 2020, DraftKings shares were worth $63.78. On October 5, DraftKings announced an SPO: a block of new shares was offered for sale at a price of $52 each. For existing shareholders, an opportunity has opened up to fix profits, because over the previous year the value of the company increased by about 400%. As a result of profit taking and increased supply, by the end of October, DraftKings shares collapsed: their price fell to 39dollars. However, this did not prevent the company from restoring capitalization by the spring of 2021.

Differences between SPO and IPO placements

Let’s summarize the key differences between the initial and secondary placement of shares.

• SPO and IPO mean, respectively, the sale of shares on the secondary market by an individual investor and the initial public offering of its shares by a private company.