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Providing services to other portfolio companies or otherwise related partners in of itself is not a bad practice, but can have many benefits for all parties inv

Providing services to other portfolio companies or otherwise related partners in of itself is not a bad practice, but can have many benefits for all parties involved. Having said that, it should always be the CEOs and senior managements responsibility to do their due diligence to evaluate any service their business depends on so heavily and regularly renegotiate. There's a good reason a Apple, Snap, Netflix etc. are using both Google and Amazon's cloud services to be in a position to leverage their relationship to negotiate better deals and not be dependent on a single provider.

Blackstone4 9y ago
Yes portfolio companies can offer services to each other for commercial rates. I think the issue here might be outlined here: "They charged over half of the total “investment”, hundreds of thousands of dollars, for an app one guy could have built in 2 months." If they are being sold a service for an inflated price then there could be grounds for charges. This could be a way to move money from one company to another. One fund could be doing very well and the VC might be in carry whilst another is doing poorly. So if you're the VC you'd want to move money into the more successful fund to generate better returns and higher carry (i.e. 20% of the profits after fees).