Inside the Manus AI–Meta Breakup: China’s Intervention and the $1B Buyback Plan

The attempted acquisition of AI startup Manus by Meta has become one of the most unusual technology deal reversals in recent years. After Meta agreed to buy the fast‑growing AI agent company for more than $2 billion, China’s regulators stepped in and ordered the transaction unwound.

Now the startup’s founders are exploring a new plan: raise about $1 billion from outside investors to buy the company back from Meta and restore it as an independent firm. The episode highlights the rising geopolitical stakes around AI startups and cross‑border investment.

What’s happening now

Manus’s founders — Xiao Hong, Ji Yichao, and Zhang Tao — are reportedly discussing a funding round of roughly $1 billion to reverse Meta’s takeover of the company. The financing would allow the founders and new investors to repurchase the business and comply with Beijing’s demand that the acquisition be unwound.

According to reports citing people familiar with the discussions, the funding could value Manus at at least the same $2 billion level Meta paid when it acquired the startup. The founders may also contribute some of their own capital to complete the buyback.

If the plan succeeds, Manus could be restructured with new backers and potentially reorganized as a mainland China joint venture, with a longer‑term goal of pursuing a Hong Kong IPO. These discussions are private and key terms have not been publicly confirmed.

Why Beijing blocked the Meta–Manus acquisition

The reversal was ordered by China’s National Development and Reform Commission (NDRC) through its foreign‑investment security review mechanism. In April 2026 the regulator instructed Meta and Manus to withdraw or unwind the transaction, citing rules that prohibit foreign investment in the project.

The intervention reflects broader national‑security concerns surrounding advanced AI technologies. Regulators reportedly examined whether the deal could lead to sensitive technology transfer, export‑control violations, or the loss of Chinese AI talent to foreign ownership.

The situation was unusual because Manus is based in Singapore but founded by Chinese entrepreneurs and retains strong ties to China. Beijing effectively asserted regulatory authority based on those links rather than solely on the company’s place of incorporation.

During the review process, two co‑founders — Xiao Hong and Ji Yichao — were reportedly barred from leaving China, a measure that suggested authorities wanted key personnel and knowledge to remain within reach while the deal was investigated.

How the new $1B funding could separate Manus from Meta

The proposed funding round would primarily serve to finance a buyback of Meta’s stake in Manus and recapitalize the company as an independent startup.

In practical terms, the money could be used to:

• Repurchase ownership from Meta to satisfy Beijing’s order to unwind the acquisition.
• Replace Meta with a new investor group that Chinese regulators consider acceptable.
• Reorganize the company’s corporate structure, potentially including a mainland joint venture.

Several key details remain unclear, including the exact buyback price, the mix of debt versus equity in the financing, and whether Meta might retain any minority stake or commercial partnership.

Manus AI’s rapid revenue and valuation rise

The startup behind Manus — Butterfly Effect — grew unusually quickly for an enterprise AI company.

• In 2025, the company raised about $75 million in a funding round led by Benchmark that valued it at roughly $500 million.
• Soon afterward, Meta agreed to acquire the company for more than $2 billion, a major jump in valuation.

Some reports suggest the company achieved around $100 million in annual recurring revenue within months of launch, driven by enterprise demand for AI agents capable of tasks such as research, coding, and data analysis.

However, the company has not released audited financials, so detailed revenue, profitability, and customer metrics remain largely unverified.

The bigger impact on global AI investment

The Manus case could have lasting consequences for the structure of AI startups and cross‑border deals.

First, it signals that China may block foreign acquisitions of companies tied to the country’s AI ecosystem — even if the business is incorporated abroad. Regulators appear willing to consider founder nationality, talent location, and technology origin when deciding whether a deal is acceptable.

Second, the episode increases risk for startups that adopt offshore corporate structures to attract global capital but still maintain deep connections to China. Those companies may face scrutiny if they attempt to sell to foreign buyers or move sensitive technology overseas.

Finally, it could shift exit strategies. Instead of selling to Western tech giants, Chinese‑linked AI startups may increasingly favor:

• Hong Kong IPOs as a liquidity path
• Domestic joint ventures with local investors
• Structures that keep control and technology closer to Chinese oversight

In short, the Manus–Meta breakup is more than a failed acquisition. It highlights the growing intersection of AI innovation, national security, and global capital, and it may shape how future AI startups structure themselves from the beginning.