If the three co-founders of Web Summit, who have been embroiled in a noxious legal standoff since 2021, cannot settle matters quietly before then, a dizzying array of dirty laundry will be aired in the Four Courts later this month.
A last-ditch attempt to avert the nine-week civil trial, currently slated for March 18th, will reportedly proceed next week after the three principals – Paddy Cosgrave, David Kelly, and Daire Hickey – settle on a London lawyer to mediate the dispute.
If those efforts are unsuccessful, the finer details of four years of claims and counterclaims will be thrashed out before what will surely be a packed court in Dublin.
[ Web Summit co-founders yet to agree on mediator prior to High Court civil trialOpens in new window ]
While new complaints and arguments have been added in the intervening years, the substance of the row lies largely in the initial deluge of legal documents filed in the High Court in late 2021 and early 2022. What do they tell us about the spectacular breakdown in relations between Hickey and Kelly on the one side, and Cosgrave on the other, and what’s at stake for the three former friends?
ECB cuts rates but signals a likely pause and hotels giant Dalata considers a billion euro sale
Mortgage holders and household finances - the ECB rate cut is good news. Right?
In an era of rising property prices, the rich in Ireland are only getting richer
Kenmare founder tried to buy listed miner and D4 gem faces demolition
Paddy Cosgrave
Cosgrave set events in motion in October 2021 when he sued Web Summit co-founder David Kelly in the High Court. His case against his old schoolmate, with whom he had been a student at Glenstal Abbey in Limerick, centred on allegations that Kelly had breached his fiduciary duties as a director of Manders Terrace, the entity behind the global conference and events management business, causing a $10 million loss to the company.
He is seeking damages against Kelly and orders that he “be made to account” for gains allegedly “made at the company’s expense. In a separate but related complaint filed in the US, Cosgrave sued Kelly and fund manager Patrick Murphy, alleging the pair established a venture capital fund that, he claimed, benefited from its association with Web Summit and used some of its resources.
No stranger to the whiff of sulphur, it was not altogether surprising to anyone who had followed his career that Cosgrave should choose to go public with his disagreements with his former friends. Whether on social media or the main stage at Web Summit, the Wicklow-born businessman had developed a reputation for attracting, even relishing in, conflict and controversy throughout the decade leading up to his case against Kelly, often to the benefit of Web Summit’s national and international profile.
In Drama Drives Interest: The Web Summit Story, journalist Catherine Sanz details how Cosgrave had developed “a remarkable skill at manipulating the media” to get his conference into the spotlight during those early years and beyond. Later on, when the relationship between Cosgrave and his fellow co-founders had collapsed into legal recrimination, Sanz refers to the “casual manner” in which Cosgrave can talk about something as serious as a lawsuit against former friends.
“Petty squabbling is, if you can afford it, worth every penny,” Cosgrave told friends in 2022, according to Sanz.
Perhaps surprising was the nature of Cosgrave’s complaints against Kelly and, later, Hickey and the incendiary language used to describe them. Kelly’s actions caused Web Summit “very considerable loss”, Cosgrave claimed in his grounding affidavit, accusing his old friend of looking to “feather [Kelly’s] own nest”.
Cosgrave accused Kelly of the “co-option of very valuable Web Summit commercial opportunities” in his dealings with Murphy. He accused Murphy and Kelly of a “concerted effort over the course of several months” to “mislead” him and Web Summit and “secretly establish” an investment fund that “improperly usurped” the events company’s brand and resources.
The fund in question was to be a follow-up to Amaranthine I, the separate but Web Summit-adjacent venture capital fund, founded by Kelly, Cosgrave and fund manager Patrick Murphy in 2018. While distinct from the conferencing business, Amaranthine was founded with a capital contribution of $2 million from Web Summit, according to the affidavit. The fund would go on to invest $30 million in total in a range of companies – including Bobby Healy’s delivery drone business Manna – before discussions began about the possibility of setting up a successor initiative in the autumn of 2020.
Around this time, the first chinks in Web Summit’s armour began to appear to the public. The Irish Times reported in May 2021 that Kelly and Murphy were setting up a new $50 million fund called Semble Fund II, following the success of Amaranthine. In the meantime, Cosgrave had claimed in a tweet that the two men had “stepped away” from Amaranthine to pursue other interests.
As chief executive and “principal founder” of Web Summit, Cosgrave said in his ground affidavit in late 2021, “it was understood and agreed” that he would play a key role in Amaranthine and any successor funds.
Paddy Cosgrave and David Kelly boarded together as schoolboys at the elite Glenstal Abbey private school in Limerick. They even lived together for a time, sharing a house at Manders Terrace in Ranelagh while getting the company off the ground
Crucially, Cosgrave claimed that when Kelly began to make known his desire to resign as a director of Web Summit in late 2020 and early 2021, he signalled his intention to break his connection to the follow-on fund. As evidence, Cosgrave furnished to the court a text from Kelly. “I am going to make life simple for myself,” he told Cosgrave, according to the affidavit. “Start my own small business or work for someone else will need to figure that out. Thanks for everything but it’s time to pull the cord.”
Kelly denies he ever told Cosgrave he planned to resign from the fund after his resignation as a director of Manders Terrace and then as an employee of Web Summit in early 2021.
Yet, Cosgrave went on in the affidavit to say he was “flabbergasted” to find out in May 2021 that Kelly and Murphy had continued work on setting up the Semble fund. He said their actions had interfered with Web Summit’s ability to set up its own investment fund around that time. Among other claims, Cosgrave believed the pair had “marketed” to potential investors a “proprietary software platform” developed by Web Summit employees using “proprietary Web Summit resources”.
David Kelly
If Cosgrave’s lawsuit against Kelly brought the falling-out between the co-founders into the spotlight, Kelly’s next move confirmed the depth of the bad feeling between them. Kelly sued Cosgrave in the High Court in November 2021, as well as his company Proto Roto and Manders Terrace, the main Web Summit holding entity, alleging that his rights as a minority shareholder had been oppressed. The applicant in the case was Graiguearrida, the entity through which Kelly holds his 12 per cent stake in Web Summit.
Of the two co-founders who have left the business, Kelly had the longest-standing relationship with the Web Summit chief executive, one that was into its third decade when he resigned as a company director in early 2021. The pair boarded together as schoolboys at the elite Glenstal Abbey private school in Limerick. They even lived together for a time, sharing a house at Manders Terrace in Ranelagh while getting the company off the ground.
As journalist Sanz details in her book, Kelly – a trained accountant who preferred to stay out of the limelight his co-founders often courted – was brought into the Web Summit fold in 2010 to “handle bigger-picture aspects of the enterprise”. This would eventually include Amaranthine Fund I.
Yet, as Kelly detailed in his grounding affidavit in 2021, his relationship with his former schoolmate had become “irredeemably toxic” in the years immediately preceding the final falling-out. The 74-page legal submission sets out a version of events centred on claims that Cosgrave had pursued a campaign of “bullying, harassment, abuse, coercion and intimidation” against Kelly.
One of the main planks of Kelly’s submission was that Cosgrave, who strongly denies the allegations, used Web Summit resources to pursue his own interests to the detriment of the company and its other shareholders’ interest in it. “Mr Cosgrave has run the company in a manner akin to a personal fiefdom,” he said in the filing, “as if he owned it outright himself”.
Among other inciting incidents referred to in the affidavit is Village magazine’s publication in 2020 of an article alleging that Leo Varadkar, who was taoiseach at the time, was responsible for leaking a confidential copy of a new contract for GPs to his friend, Dr Maitiú Ó Tuathail, in 2019. Kelly claims Cosgrave worked on the article with healthcare entrepreneur Chay Bowes – the source of the leak to Village – and two Web Summit employees.
Kelly said he had texted some of his concerns about the situation – chiefly that the article could leave the company open to legal action from Varadkar – to Patrick Kirwan, Web Summit’s chief financial officer. Kirwan replied that there was a need to “keep church and state completely separate” when it came to Cosgrave’s interests and Web Summit’s, an effort made “hard at times when PC links directly with the people”.
Raising Bowes’ appearance as a speaker at Web Summit directly with Cosgrave led to a “tirade” from the chief executive, Kelly said, “of the kind to which I had by then become accustomed, in which he claimed that I was immoral”. Cosgrave then told him that “Web Summit was his company and that he could choose who he wanted to speak” at its conferences.
A constant theme in the submission is Cosgrave’s alleged treatment of Web Summit staff, his “threatening” behaviour towards Kelly and his “intense personal animus” towards Hickey, who had resigned as a director of Web Summit in 2017. He claimed Cosgrave had “repeatedly tried to enlist [him] in attempts to coerce Mr Hickey to surrender his beneficial shareholding in the company”.
Daire Hickey
Daire Hickey, who owns 7 per cent of Web Summit, was the last of the three to enter the fray. In November 2021, he sued Cosgrave and Manders Terrace, alleging, like Kelly, that his rights as a minority shareholder in the entity behind the conferencing business had been oppressed. In their shareholder oppression proceedings, both Hickey and Kelly want Cosgrave to acquire their stake in the business. The question of the price to be paid for those shares will be hotly contested should the row finally get its day in court.
Hickey’s relationship with Cosgrave, which Sanz describes as initially being that of student and teacher, dates back to their time at Trinity College Dublin. “I looked up to Mr Cosgrave,” Hickey said in his grounding affidavit, “and sought to follow in his footsteps.” Shortly after Cosgrave’s term in office, the Ballincolig, Co Cork-born businessman served a term as president of the University Philosophical Society (The Phil), one of two on-campus debating societies known to invite and attract celebrity guests to speak at their events. This served as both Cosgrave’s and Hickey’s entrée into the world of tech founders, furnishing them with some of the contacts that would help them get Web Summit off the ground in 2009.
[ Daire Hickey steps down from RTÉ boardOpens in new window ]
When the business was restructured and formally incorporated in 2012, Hickey said he, Kelly and Cosgrave were directors and employees of Manders Terrace. “By way of illustration of the seniority and centrality of my role in the company,” he said, “only two representatives of the company generally spoke on behalf of the company on the main stage at the Web Summit or to media: Mr Cosgrave and I.”
However, the “breakdown” of his relationship with Cosgrave led to his departure as an employee of the company in 2017. Hickey would go on to found 150 Bond, a communications company that now counts some of the world’s leading tech companies among its clients.
In his affidavit, Hickey said he was “forced out” as a director of the business in 2019. He said Cosgrave had refused “point-blank” to acknowledge his status as a director following his departure from the company in 2017, failing to notify him of board meetings, provide him with financial information or the opportunity to review draft financial statements. Moreover, in correspondence with Cosgrave and another senior Web Summit employee, Hickey said he was threatened with his “removal” as a director if he did not resign on his own steam.
What happened after that, according to Hickey, was of an altogether more personal nature. He said Cosgrave had “harboured a deep animus” towards him after his departure and taken “a number of steps” to “destroy” Hickey’s reputation. This included “representing that he was putting together a ‘full dossier’ of reputationally damaging material” about Hickey, centred on a 2016 complaint made against him, which was brought to light in Kelly’s affidavit.
Hickey said he was aware of the complaint but was told at the time that it had been resolved through an “informal process to the satisfaction of the staff member concerned”. Consequently, he said he was never asked to respond and was “given to understand by Mr Cosgrave at the time that he did not consider it a serious matter”.
Like Kelly, Hickey added a claim against Cosgrave in 2024, arguing that Web Summit and their stakes in it had been damaged by Cosgrave’s tweets about Hamas and Israel, his subsequent resignation from the company and later return.
Whether it all comes to blows in court remains to be seen. It’s already been a bruising spectacle, however, one that each of the three men will surely want to put behind them one way or the other.
