In the world of deal-making, the default language is cash for equity. But this rigid approach often fails to capture the true value of a founder’s life’s work or the strategic contribution of a new partner.
Our recent partnership with Ortwin Paetzold’s Lechenicher Schachserver (LSS) is a real-world example of a different path. It’s a masterclass in how to structure a deal based on mutual respect, shared growth, and the formal recognition of “sweat equity.” This case study dissects that deal, offering a tangible blueprint for how we build lasting value at One4All.
The Problem: A Brilliant Creator Needs a Commercial Catalyst
For over 20 years, Ortwin Paetzold has been the passionate creator behind LSS, a highly respected online chess platform. Like many brilliant founders, his focus was on perfecting the product, not monetizing it. The chess world isn’t the BioTech world; you can’t simply wait for a Big Pharma equivalent to acquire you for millions. Ortwin had created immense value, but it was latent potential.
The challenge was clear: LSS needed a partner who could unlock this commercial potential without destroying the platform’s soul. A simple cash injection would have been the wrong tool. It would have been like telling a brilliant cancer researcher to suddenly become a sales manager. What Ortwin needed was a partner who spoke his language, understood his creation, and could bring the commercial and strategic firepower to the table. Flashing money would have built suspicion, not trust. We needed a structure built for synergy.
Formalizing Sweat Equity: From Vague Concept to Contractual Term
“Sweat equity” is a term thrown around loosely. In our LSS deal, we made it concrete. We understood that for the partnership to succeed, my team and I would invest significant time and expertise. Simultaneously, Ortwin would be dedicating new effort to our shared growth initiatives.
We formalized the value of this labor. For approved development work that went beyond the platform’s current state, we assigned a clear hourly rate (€75/hour) plus a 20% premium, treating it as a capital investment to be recouped. This isn’t about nickel-and-diming; it’s about respect. It ensures that both parties’ non-cash contributions are formally valued and accounted for. It transforms “sweat” from an informal understanding into a cornerstone of a fair and transparent partnership, fostering a joint valuation process where both sides understand the how and why.
The "Base Plus" Model: Eliminating Fear, Maximizing Motivation
The psychological component of a deal is paramount. To honor Ortwin’s two decades of work, we structured the deal to give him 100% of the historical profit and revenue base he had already built. Our partnership, and our 50/50 profit split, applies only to the new growth we create together.
The power of this “Base Plus” model is profound. For the founder, it eliminates the fear of losing what they’ve already built. It shows them, in no uncertain terms, that you respect their legacy. For the new partner, it creates a powerful and direct incentive: you only eat what you help cook. From day one, all interests are perfectly aligned toward a single goal: growing the pie for the benefit of both parties.
The Single Most Important Lesson: Partnership Over Transaction
After decades in deal-making, I’ve learned that for small and medium-sized enterprises, chemistry and synergy are infinitely more valuable than complex legal clauses. When Ortwin’s legal review suggested adding a severability clause for extra security, we embraced it immediately. Why? Because a partnership is a living thing. Anything that makes your partner feel more secure and “together” in the venture is an investment in your shared success.
The LSS deal is now the template for our One4All collaborations. The lesson for any entrepreneur who wants to work with us is simple: We are not here to buy a piece of your company. We are here to build the future of it with you. We start with a conversation, not a term sheet. We focus on your vision for growth, not on begging for capital. We believe that when you align trust, talent, and transparency, you create a collaborative energy that is far more powerful than any simple transaction.