Key Points:
- Manus co-founders are planning to raise $1 billion from external investors to buy back their startup from Meta.
- The planned buyout aims to resolve a direct demand from Beijing regulators to unwind the controversial $2 billion acquisition.
- The three founders, Xiao Hong, Ji Yichao, and Zhang Tao, are aiming for a valuation of at least $2 billion for the buyback.
- If successful, the co-founders plan to turn Manus into a Chinese joint venture and eventually pursue an IPO in Hong Kong.
Manus co-founders are scrambling to undo Meta Platforms’ controversial $2 billion acquisition of their artificial intelligence startup. To satisfy urgent demands from Beijing, the founders are looking to raise about $1 billion from external investors to buy back the business. This move highlights the growing regulatory wall between U.S. tech giants and Chinese-developed AI technologies.
The three co-founders — Xiao Hong, Ji Yichao, and Zhang Tao — are talking to potential investors about a new funding round. They aim to value the company at at least $2 billion, which is the exact price tag Meta paid to buy the agentic AI developer in December 2025. Sources close to the discussions say the founders might also inject their own money to complete the transaction if external funding falls short.
If the founders successfully raise the cash and buy back the company, they plan to restructure Manus. The next steps would involve establishing Manus as a Chinese joint venture with its new backers. This setup would lay the groundwork for an eventual initial public offering on the Hong Kong Stock Exchange, providing a clear path forward for the business after its chaotic stint under American ownership.
The trouble started in late April 2026 when China’s National Development and Reform Commission (NDRC) ordered Meta to reverse the acquisition. Chinese authorities cited potential violations of foreign direct investment rules and raised deep concerns over the export of strategic AI technology. The ruling shocked the industry because the transaction had closed five months earlier and Meta had already integrated Manus’s tools into its platform.
The regulatory block reveals a major shift in how Beijing views domestic technology. Manus actually moved its headquarters and core team from China to Singapore in mid-2025, operating under a Singaporean legal entity called Butterfly Effect. Despite the startup cutting most of its Chinese workforce and legally redomiciling to Singapore before Meta bought it, Beijing insisted that the company’s Chinese roots and the origin of its technology still subjected the deal to domestic investment-security reviews.
Tensions around the deal became public in March 2026 when Chinese authorities restricted chief executive Xiao Hong and chief scientist Ji Yichao from leaving the country. Regulators summoned the executives to Beijing to answer questions about the deal’s compliance with foreign investment laws. While they did not face criminal charges and remained free to travel within China, the travel ban sent a clear signal that Chinese regulators would not let the transaction slide.
For Meta, losing Manus represents a significant roadblock in the fierce global race to dominate artificial intelligence. Meta hoped that Manus’s specialized AI agents would help it leapfrog past competitors like Microsoft, Google, and OpenAI. Now, Meta faces the incredibly difficult task of untangling and removing Manus’s integrated technology from its own systems within a tight deadline set by Chinese regulators.
This forced reversal acts as a warning to other Chinese-founded startups trying to distance themselves from Beijing to court Western buyers. Many tech founders have relocated to places like Singapore to insulate themselves from geopolitical friction. However, Beijing’s aggressive stance proves that physical relocation does not automatically shield a company from Chinese export controls if the core technology was originally developed in China.
Unwinding a fully completed $2 billion acquisition is a massive headache. The proposed $1 billion capital raise would not only help buy back Meta’s shares but also fund the highly complex technical work needed to separate the two companies’ data systems. The remaining funds would serve as working capital to keep Manus running as an independent entity over the next year as it attempts to rebuild its business model outside of Meta’s massive ecosystem.
