This article explores the dramatic rise and fall of Toptal, a software development platform. It details the early investment by tech investor Grosz, the company's rapid growth under CEO Du Val, and the subsequent legal disputes that have erupted.
But for every Nvidia or Facebook, there are many more flameouts. Some hardly get off the ground, while others raise money at lofty valuations before vanishing into obscurity.
A few years later, Grosz told other investors he expected a healthy return on his early bet. The company was called Toptal, which is short for top talent, and his investment marked the beginning of a soap opera that has soiled reputations, caused turmoil within a promising startup, and sparked a battle that today is raging in federal court.
The two men were on a mission together – to turn the tiny business with fewer than 50 employees into an industry powerhouse. In 2012Grosz loaned Toptal $1 million at a 4% interest and also signed an advisor agreement with the company to provide expertise on search engine optimization to assist growth.
Grosz claims he had a handshake agreement with Du Val. The promise was that Toptal would raise capital that would lead to the investor owning stock. However, Toptal never raised additional funding. So Du Val maintained 100% control of the company, and he says Grosz had no legal claim to an ownership stake.
"They constructed what they called a 'cancer patient strategy,' basically turning Toptal into a cancer patient and then making it so crippled that they could steal the company," Du Val told CNBC. In a unanimous decision in November of last year, an eight-person jury found Mechanism Ventures liable for intentional interference and awarded Du Val $15 million in punitive damages and $535,270 in compensatory damages. The judge denied Mechanism Ventures' motion for a new trial in April 2024, but did reduce the award of punitive damages to $1.6 million, writing that the $15 million was"grossly excessive" in relation to the compensatory damages.
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