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I recently watched the 'China Hustle' Documentary (you can get a quick synopsis look on the Wikipedia article if you're not acquainted with the documentary, but it may not be necessary to answer my question below).

Then I read this article-interview by Vanity Fair (Please definitely read before answering the question in order to find and understand the specific statements I'm talking about, while also having some context).

In this article-interview, I was confused about the film-maker's answer to the last question in this article-interview. (Last Question: "This movie felt to me like a preamble for a bigger crisis that could come down the pike at any time. You reference the Chinese company Alibaba and Trump’s calls for deregulation, but you stop there. What do you think will happen?").

Particularly, these two sentences/statements in his answer: "And Internet companies are more opaque." "There are financial structures that are potentially problematic"

These two statements are vague and I'd like to know a little bit more what he is referencing?

  1. How are internet companies being more opaque? Are they becoming more financially opaque in which similar to the Chinese reverse-merged companies their stocks are getting overvalued based on hype that doesn't actually pull-in that much revenue or profits?

  2. What does he mean by "There are financial structures that are potentially problematic". What companies is he referencing? What type of financial structures?

If this is the wrong place to post this, please kindly let me know. Thank you so much for all your time and efforts!

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  • $\begingroup$ Why is this question getting voted down? Is there something wrong I did? Any idea @Brian Romanchuk ? $\endgroup$ – Rey Jun 25 at 2:34
  • $\begingroup$ Or perhaps @1muflon1 may have some idea? $\endgroup$ – Rey Jun 25 at 2:39
  • $\begingroup$ You'd have to ask Jed Rothstein to know exactly what he meant, but presumably it's related to the high prevalence of venture capital and angel investors among tech startups. $\endgroup$ – Brian Z Jun 29 at 14:40
  • $\begingroup$ @BrianZ So since venture capital and angel investors are private forms of funding (compared to equity and debt financing which are still more transparent I guess due to regulations) it is considered "potentially problematic" due to being opaque?...... And basically whenever a system is financially opaque it leads to scams, corruption, etc?....However, I don't see how financially opaque tech firms are a problem for the economy because once they do IPOs they're off the hook from the opaque VC and Angels. You can't scam mom & pop investors in this way the same way that was done in the documentary $\endgroup$ – Rey Jun 29 at 23:07

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