In a non-control deal, an investor cannot fire management. Therefore, the primary diligence focus must shift from the business itself to the founder's character and the potential for a strong partnership, as this relationship is the ultimate determinant of success.

Unlike in private equity, an early-stage venture investment is a bet on the founder. If an early advisor, IP holder, or previous investor holds significant control, it creates friction and hinders the CEO's ability to execute. QED's experience shows that these situations are untenable and should be avoided.

Activists can be effective even in companies with dual-class shares or founder control. The mechanism for influence is not the threat of a proxy fight but the power of good ideas and relationships to achieve strategic alignment with the controlling party.

When a founder faces a major acquisition offer, the pivotal question isn't just about valuation, but temperament. A board member should ask, "Are you built to be a public company CEO?" The intense stress and public scrutiny aren't for everyone. Pushing a founder who isn't an "IPO guy" to reject an offer can be a disastrous long-term decision.

Top-performing, founder-led businesses often don't want to sell control. A non-control investment strategy allows access to this exclusive deal flow, tapping into the "founder alpha" from high skin-in-the-game leaders who consistently outperform hired CEOs.

Deciding whether to back a competitor is fraught with conflict. When the speaker considered investing in Stripe, a Square executive called it a conflict, but CEO Jack Dorsey approved. This shows opinions on threats vary internally, justifying multiple checks before proceeding with a potentially conflicting investment.

Matt Grimm of Anduril highlights that many secondary share offerings are structured as "forward contracts," which he calls notoriously hard to settle and explicitly disallowed by his company's bylaws. This means investors in such SPVs face extreme counterparty risk and may never actually take possession of the shares.

An investor's power over a portfolio company is fundamentally limited and primarily negative. While a VC can block a founder's actions, such as through board approval or withholding capital, they cannot force a founder to take a specific path, even if it seems obviously correct. The role is to advise and assist, not to command or execute.

When a private equity investment thesis is primarily built around a single person (e.g., a star CEO), it's a sign of weak conviction in the underlying business. If that person fails or leaves, the entire rationale for the investment collapses, revealing a lack of fundamental belief in the company's industry or competitive position.