Manus AI Raises Over $500 Million in First Funding Round Since Blocked Meta Acquisition

Manus, the high-profile AI agent startup that was briefly acquired by Meta for approximately $2 billion before regulatory intervention by Beijing forced the deal to unravel, has successfully secured more than $500 million in a fresh funding round.

The startup’s parent company, Butterfly Effect, officially confirmed the massive capital injection through a WeChat post. The funding round was co-led by prominent investment institutions Boyu Capital and IDG Capital, with participation from a roster of existing backers including Tencent, HSG (the prominent venture capital firm formerly known as Sequoia China), and ZhenFund.

While Butterfly Effect did not publicly disclose the specific valuation achieved in this latest round, previous reports from Bloomberg indicated that the company was targeting a $500 million raise at a substantial $4 billion valuation—roughly double the price tag that Meta had agreed to pay for the startup during its brief acquisition phase. Furthermore, the company has not yet detailed exact allocations for how the newly acquired capital will be deployed, though representatives confirmed that the firm intends to aggressively continue its hiring initiatives both within China and across international markets.

The Rise of Agentic AI and the Manus Phenomenon

Manus specializes in the development of autonomous AI agents—sophisticated software systems designed to move far beyond the conversational limitations of traditional chatbots. Rather than merely responding to user prompts with text, these agents are engineered to take high-level goals and execute complex multi-step workflows independently, ranging from end-to-end trip planning to intricate stock market and financial analysis.

When Manus first launched onto the global stage in March 2025, it was widely positioned as a formidable Chinese rival to OpenAI’s high-end, subscription-based agent model. Initially rolled out on a strictly invitation-only basis, the software generated immediate and frantic consumer demand. Reports surfaced that invite codes for the platform were being listed on Chinese secondary resale marketplaces for staggering sums, with some reportedly reaching as high as 10 million yuan, equivalent to over $1.3 million.

Beneath its polished user interface, the startup acknowledged a hybrid technical foundation, leveraging Anthropic’s Claude alongside fine-tuned iterations of Alibaba’s Qwen models, seamlessly integrated with its own proprietary architecture. At the time of its debut, the concept of agentic AI was still in its relative infancy, and Manus was actively pioneering use cases that the broader AI industry heavyweights had yet to fully commercialize.

Rapid Growth and the Aborted Meta Deal

As demand for its technology surged, Manus strategically relocated its core team to Singapore around the middle of 2025, a move that involved scaling down a significant portion of its domestic operations in China and executing localized layoffs by July. Despite these structural shifts, the company’s commercial momentum continued to accelerate at a rapid pace. By December 2025—roughly eight months after its initial market launch—Manus successfully hit a major financial milestone, surpassing $100 million in annual recurring revenue driven by its subscription offerings.

It was around this exact timeframe that tech giant Meta stepped in, announcing in December 2025 that it had reached an agreement to acquire Manus for approximately $2 billion in a bid to capture a dominant position in the next era of AI innovation.

However, the high-profile cross-border acquisition immediately attracted intense regulatory scrutiny. In January, China’s commerce ministry announced that it would closely review the proposed transaction. By March, the situation had escalated significantly when Manus co-founders Xiao Hong and Ji Yichao were summoned to Beijing and barred from leaving the country, according to reports from Reuters.

The regulatory hammer finally dropped on April 27, when China’s top economic planning agency, the National Development and Reform Commission, officially ordered the acquisition to be unwound. The agency stated that it would prohibit foreign investment in Manus in accordance with local laws and regulations, effectively killing the multi-billion-dollar deal.

Navigating Independence and a Shifting Regulatory Landscape

Following the government intervention, Meta officially severed ties with the startup in June. By August, Manus announced its formal return to independent operations, taking the necessary technical steps to separate its infrastructure from Meta’s systems by deleting user data that had been created on or after December 29, 2025.

Since reclaiming its independence, the competitive landscape for AI agents has evolved dramatically. During the period of regulatory limbo, attention within the developer community heavily drifted toward OpenClaw, an open-source agent designed to run locally on personal machines while accepting commands through messaging applications like WhatsApp and Telegram. OpenClaw went viral, accumulating well over 100,000 GitHub stars within a matter of weeks, prompting OpenAI to hire the project’s creator, Peter Steinberger, to spearhead its own strategic push into personal AI agents.

Meanwhile, Meta moved forward with its own developer ecosystem, launching its coding agent, Muse Code, in August. The product entered a crowded market where many analysts viewed it as late to the fight against established alternatives like Codex and Claude Code. For its part, Manus has continued to refine its product offerings, recently rolling out Cue—an application that equips AI agents with dedicated phone numbers and digital wallets, governed by strict budgetary limits defined by the user.

The trajectory of Manus unfolds against the backdrop of an increasingly stringent regulatory environment for technology firms within China. In May, Beijing implemented new travel restrictions requiring senior artificial intelligence workers at private firms, including industry leaders like Alibaba and DeepSeek, to secure official approval prior to traveling abroad. These measures underscore the rising geopolitical and strategic value of domestic AI capabilities as Chinese startups increasingly achieve technical parity with their American counterparts.