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.

By defending the pro rata rights of early backers against new, powerful investors, founders play an "infinite game." This builds a reputation for fairness that compounds over time, attracting higher-quality partners and investors in future rounds.

Instead of a large upfront equity investment, strategic partners can use warrants. This gives the corporation the option to earn equity later if the startup achieves specific milestones, often through their joint partnership. This approach de-risks the initial investment and directly rewards successful collaboration.

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.

To vet potential investors or acquirers, founders should ask them to articulate their vision for the startup's next five years. Hearing their story told through the buyer's eyes reveals the depth of their strategic thinking and helps assess whether their vision aligns with the founder's, ensuring a better post-transaction fit.

Oshkosh structures partnerships to own IP developed jointly with a startup, then licenses it back. This approach, outlined in the initial NDA, gives the large corporation control over patent defense while providing the startup with usage rights, often with market-specific limitations.

The most lucrative exit for a startup is often not an IPO, but an M&A deal within an oligopolistic industry. When 3-4 major players exist, they can be forced into an irrational bidding war driven by the fear of a competitor acquiring the asset, leading to outcomes that are even better than going public.

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.