Manus founders seek $1 billion to reverse Meta acquisition after Chinese regulatory block

Manus Explores $1 Billion Raise to Reverse Meta Acquisition

Manus co-founders Xiao Hong, Ji Yichao, and Zhang Tao are weighing options to raise approximately $1 billion from external investors to buy itself out of Meta acquisition, following China's directive to unwind the deal 1

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. The funding round under discussion would value the AI startup at a level matching what Meta paid to acquire Singapore-based Manus in its $2 billion-plus December deal 1

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. The founders may contribute their own capital to bridge any funding gap, potentially transforming Manus into a joint venture with backers and paving the way for a Hong Kong IPO 1

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China Ordered Meta to Unwind the Deal Amid Investment Rule Violations

China's National Development and Reform Commission issued the order to undo Meta takeover in late April, citing possible violations of Chinese investment rules and concerns about the outflow of strategically important AI technology .Meta announced the acquisition in late December to expand advanced AI integration across its platforms, but China soon launched a review and imposed a Chinese block that barred two Manus co-founders from leaving the country 1

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. Meta has been preparing for the unwind under a regulator-set deadline of weeks rather than months 2

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Corporate History and Geopolitical Complexities Drive Regulatory Scrutiny

Manus was originally founded in China and relocated its headquarters and core team to Singapore last year after a US-led venture round, with most of its Chinese workforce cut and the operating entity changed to Singapore-based Butterfly Effect 2

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. By the time Meta completed the acquisition in December, Manus was legally a Singaporean entity. However, Beijing's position maintains that the Chinese-origin status of the underlying technology and the team's prior Chinese employment history still bring the company within the scope of Chinese investment rules 2

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. This marks the most visible example to date of Beijing's willingness to extend cross-border AI investments enforcement to Singapore-headquartered companies with Chinese roots, regardless of current incorporation location.

Agentic AI Startup's Strong Performance Fuels Recapitalize Strategy

Manus develops general-purpose AI agents that function as digital employees, independently carrying out tasks such as research and automation with minimal human input 1

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. The company's reported $100 million-plus annual recurring revenue run-rate, achieved within eight months of launching its first agentic AI product, forms the operational foundation for the proposed funding round 2

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. The December valuation in the Meta deal implied roughly a 4x markup over the $500 million valuation set in an April 2025 round led by Benchmark 2

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US-China Tech Tensions Reshape Cross-Border Investment Landscape

The regulatory intervention reflects escalating US-China tech tensions and Beijing's tighter scrutiny of U.S. investments in advanced domestic tech firms 1

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. Legal analysis from O'Melveny has flagged the precedent as material for any US-led AI deal involving a target company with Chinese roots, indicating that Singaporean re-domiciliation no longer neutralizes Chinese investment-review risk 2

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. The raise would position Manus to operate as a standalone Singapore entity with sufficient capital to compete in the agentic AI category, particularly as Singapore positions itself as the Asia-Pacific AI hub for Western-aligned companies 2

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. Manus has not named potential investors or signaled a target close date for the recapitalization 2

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