An ASIC search reveals Mr Barbagallo has been a director of Fortress Capstone since 2007 and holds a stake in the company with his wife.
Ms Palaszczuk said funding decisions were made independent of ministers and cabinet and the company was declared on Mr Barbagallo's pecuniary interests register.
She said Mr Barbagallo had sought advice from integrity commissioner Nikola Stepanov.
Ms Palaszczuk also committed to holding an audit.
"I am happy for clarity to do an audit to ensure that all processes were followed,"she said.
"I know the chief of staff is absolutely rigorous in making sure that processes are followed."
Ms Palaszczuk clarified the payment was not a"grant"but was a"co-investment fund",and said an independent panel made final investment decisions.