- Manus AI founders are exploring a $1B raise to buy back the company after China ordered Meta to unwind its $2B+ acquisition
- The startup could re-emerge as a China-linked joint venture before pursuing a potential Hong Kong IPO
- The case is becoming a landmark warning for US AI deals involving Chinese-origin technology and a human story about what happens when geopolitics catches founders in the crossfire
Two of the founders who built one of AI’s fastest-growing companies were barred from leaving China while regulators investigated the sale of their startup to one of the world’s most powerful technology companies. That detail — buried in the machinery of a regulatory review — tells you more about where this story is headed than any valuation figure.
China has blocked Meta Platforms’ planned acquisition of Manus AI, a deal valued at more than $2 billion, and ordered it unwound. Now, according to Bloomberg, citing people familiar with the matter, Manus co-founders Xiao Hong, Ji Yichao, and Zhang Tao are exploring a funding round of up to $1 billion to regain control of the company they built. The founders may also contribute their own capital to close any remaining gap, with the buyback expected to be struck at a valuation at least matching what Meta originally paid.
The deal that came apart
Manus was founded in China before relocating its headquarters and core operations to Singapore in 2025 — a move that, as TFN reported at the time, immediately drew scrutiny from Chinese regulators over whether it constituted an attempt to move strategically sensitive technology beyond Beijing’s reach. When Manus first launched in March 2025, it was heralded as the world’s first general-purpose AI agent — a claim that drew millions onto its waiting list within days. It had already been dubbed China’s answer to DeepSeek — a label that made Beijing’s decision to block the Meta deal feel even more deliberate.
It quickly became one of the defining companies in the emerging agentic AI market, developing systems capable of autonomously handling complex digital tasks and workflows with limited human input. Its ascent was unusually steep: the startup reportedly crossed $100 million in annual recurring revenue within nine months, a trajectory that drew serious investor attention and, eventually, Meta’s interest.
Meta acquired Manus in December to deepen advanced AI integration across its ecosystem. But China’s National Development and Reform Commission launched a review into whether the transaction violated Chinese investment rules, specifically around the transfer of strategically important AI technology to an American buyer. During the investigation, the two Manus co-founders were reportedly barred from leaving China, a detail that transforms what might otherwise read as a corporate dispute into something considerably more consequential.
Meta has not commented publicly on the unwinding of the deal or what Manus represented to its AI roadmap. In a brief statement, a Meta spokesperson said the transaction “complied fully with applicable law” and that the company anticipated “an appropriate resolution to the inquiry.” But the acquisition was not incidental. Agentic AI — systems that can plan, reason, and execute tasks autonomously — is increasingly seen as the next frontier of enterprise software, and Manus was among the most credible players in that space. What Meta loses here is not just a target. It is a foothold in a category that rivals including OpenAI are racing to dominate.
The harder problem is technical
Financing the buyback is only part of the challenge. Much of Manus’s technology has already been integrated into Meta’s systems, making a clean separation technically complex and expensive. The proposed funding would need to cover not just the repurchase but the cost of disentangling the startup’s infrastructure and rebuilding it as a genuinely independent operation — a process that engineers and legal advisers in similar situations have described as painstaking and unpredictable in its timeline.
Whether a $1 billion raise is achievable is not a given. The company is being bought back under regulatory duress, its technology is partially embedded in another company’s systems, and the geopolitical environment that killed the Meta deal has not changed. Investors will need to weigh the upside — Manus is projected to generate roughly $1 billion in revenue in 2026, according to people familiar with its financials — against a risk profile that is genuinely unusual even by the standards of late-stage AI investing.
What comes next — and what it signals
If the buyback is completed, Manus is expected to re-emerge through a Chinese joint venture structure backed by new investors, with a Hong Kong IPO as the likely next destination rather than a US listing. That choice of venue is itself significant: Hong Kong sits at the intersection of Chinese regulatory jurisdiction and international capital markets, and for a company whose technology China has now explicitly designated as strategically sensitive, a US listing would carry obvious complications.
The broader implications extend well beyond Manus. This is now one of the clearest cases on record of China actively blocking the transfer of AI technology to an American acquirer — and doing so in a way that directly constrained the personal freedom of the founders involved. For venture capitalists backing Chinese-origin AI startups, for US technology companies evaluating acquisitions in the sector, and for the startups themselves navigating dual jurisdictions, the question this case raises is no longer hypothetical.
The next time a fast-growing AI company relocates from China to Singapore and raises capital from Western investors, the founders, their lawyers, and their backers will all be thinking about what happened to the people who couldn’t leave.
