I've worked in and around private equity as an investor in buyout and VC funds in the US. There's a fundamental misalignment of interest here as investors migh

I've worked in and around private equity as an investor in buyout and VC funds in the US. There's a fundamental misalignment of interest here as investors might not be the same across both funds. VCs are supposed to disclose intra portfolio company dealing and services to investors (LPs). They may even require LP approval to do so. Some private equity firms have historically charged "consulting/management" fees to portfolio companies and they can be offset against management fees at fund by 50% to 100%. Private equity firms in the past have been fined multiple millions of dollars for not disclosing these arrangements to LPs. This on the other hand looks like intra portfolio company services and if everything you say checks out, I can't imagine the investors approved this. If they know about it or approved it, they may have had the wool pulled over their eyes. If it is as bad as you say it is, then it's probably illegal and could warrant the SEC getting involved.