Manus founders seek $1B to buy back Meta startup after Beijing order

Manus co-founders are seeking approximately US$1 billion from outside investors to buy back their AI startup from Meta following Beijing's ordered unwinding of the acquisition on national security grounds. The three founders are discussing a funding round at a valuation of at least US$2 billion, matching the price Meta paid for the company, with founders potentially contributing some of their own capital. This represents the first public block of foreign investment in China's AI sector under the Measures for the Security Review of Foreign Investment, a national security review system for foreign deals that forced the companies to break up a transaction that had already closed.

Regulatory Background

China's regulators ordered Meta Platforms and Manus to unwind their approximately US$2 billion acquisition, with officials focusing on China-origin AI talent and technology capable of handling large volumes of data. During the review process, Manus CEO Xiao Hong and chief scientist Ji Yichao were called to Beijing in March. Subsequently, mainland China barred both men from leaving.

Following the buyback and reorganization as a Chinese joint venture, Manus is planning a Hong Kong IPO.

Broader Implications for Cross-Border Deals

The case adds another risk factor for cross-border AI deals, as both US and Chinese authorities have moved to unwind completed transactions over national security concerns. Legal experts expect deal terms to shift in response. Buyers may request escrow arrangements, where money is held until conditions are met, plus reverse termination fees tied to the risk of a post-closing unwind.

Reviews may widen for investors and enterprise software buyers, who may need to examine where technology originated, where research work occurs, and where founders are based. They may also need to assess whether travel restrictions affect founders. A legal headquarters in another jurisdiction may not protect a company from regulators if its technology, talent, or data are rooted in a sensitive jurisdiction such as China.