Amazon came under fire in May when its newly released Echo Show looked almost identical to an existing voice-controlled video device made by Nucleus, a startup Amazon invested in through its Alexa Fund.
Nucleus CEO Jonathan Frankel took to the press to show his frustration about getting copied by his own investor — a notion that Amazon shrugged off, saying the idea for the Echo Show came way before investing in Nucleus.
But in private, Amazon made a more concerted push to diffuse those concerns.
After the Nucleus incident, Alexa Fund representatives called a handful of its portfolio companies to say a clear "firewall" exists between the Alexa Fund and Amazon's product development teams, CNBC has learned. The calls were meant to reinforce that the fund does not share information about portfolio companies with other parts of Amazon.
But it also was a reminder that the fund shouldn't be blamed if Amazon happens to come up with a competing product.
"It sounded like they were disarming themselves from liability in a way, saying they would have no idea if Amazon was working or not working on something competitive," said Carlos Herrera, CEO of PetNet, a startup backed by Alexa Fund.
Despite those efforts, Alexa Fund continues to sit in a tricky position. The fund, launched in 2015 with $100 million, works closely with other teams at Amazon, which could make it a double-edged sword for startups receiving money from it, according to more than a half dozen portfolio companies and investors we spoke with.
Like most corporate venture funds, Alexa Fund's main goal is not to maximize returns, but to serve in the best interest of its parent company — in this case, investing in startups that help expand Alexa's voice technology ecosystem.
But to do so, Alexa Fund encourages its portfolio companies to work with other teams at Amazon for engineering, product, and marketing support, and requires a lot of information sharing. At least three portfolio companies said the product teams were directly involved in the funding process and their approval was needed to get the investment.
"I can't imagine there's no information sharing. That was part of the due diligence process," Herrera said.
In an email statement, Amazon told CNBC that the Alexa Fund has "measures" in place to ensure "appropriate treatment" of confidential information, and that Amazon independently designs and builds its own devices.
"We do not incorporate any Alexa Fund portfolio companies' confidential information into Amazon products," Amazon said in a statement. Amazon also said that Alexa Fund portfolio companies often ask for introductions to teams within Amazon, and any such information sharing is "to help the companies with their Alexa integrations."