A tech giant takeover of a startup is an experience not often witnessed these days. However, this is exactly what is happening in Beijing right now as the three founders of the artificial intelligence company Manus are hustling to put together a financial package valued at around USD 1 billion. On the surface, the self-deal is simple, but in reality it’s profoundly complicated: they are trying to sell back their own company to the same social media giant that purchased it based on murky conditions that have since come under tough criticism from Chinese authorities.
Manus co-founders Xiao Hong, Ji Yichao and Zhang Tao are actively seeking a new round of funding, Bloomberg News reported Thursday. The proposed valuation would be at least the same $2 billion Meta paid for ownership of the agentic AI company. That means it’s not just about finding any investors but those willing to wager on a politically sensitive and costly turnaround of one of the more divisive tech deals to come in recent years.
The narrative comes back to the original acquisition of Manus by Meta, who was perceived as a bold move for cutting-edge AI capabilities for their agents. Agentic AI: These are systems that can operate independently, make decisions, and take actions without being promptered by humans all the time. Imagine an artificial intelligence that not only responds to your question, but also arranges travel for you, reschedules your appointments, and communicates with a vendor on your behalf. Such technology is deemed to be a strategic asset to governments across the Pacific. The strategic importance of that is precisely why Beijing is now calling for the break up of the deal.
In the regulatory arena, China has been increasingly cracking down on cross-border technology transfers and acquisitions of domestic AI companies. The Manus–Meta agreement seems to have been a “red line” due to the sensitive nature of the data or intellectual property involved. But the nature of Beijing’s demand has not been publicly disclosed, and people familiar with the situation have mentioned that there was little leverage to negotiate the unwinding of the takeover in the order. “So the founders are in a bizarre situation: they’re trying to buy back a company they sold; they’re paying almost as much as they did in the original sale; and they’re raising almost half of that money from outside investors.”
Were it not for the irony it might be. The creators probably marked a significant milestone in their lives by selling Manus to Meta. They are back to the fundraising game, trying to attract the attention of VC firms and perhaps the sovereign wealth funds in order to raise a billion dollars. Other sources of the remaining half of the two-billion dollar figure are likely to be other existing shareholders, or the founders themselves, according to the Bloomberg report, but don’t quote me on that. The bottom line is that the valuation is set at two billion, so it can’t be valued at less than that than what Meta paid.
In reality, it is a huge undertaking to raise a billion dollars for such a buyback. Investments in the AI sector have slowed a bit since late 2023-early 2024, but agentic AI is still a popular subsector. Not only technology and team, but regulatory risk will be on the minds of investors. For after all, if Beijing forced a sale once, can it set new demands for a sale? However, supporting a firm that the Chinese government explicitly wishes to keep under its control could be regarded as politically aligned and thus be safer in the long-term. Double edged sword.
As for the founders, Xiao Hong and Ji Yichao and Zhang Tao are not in the spotlight since the original acquisition. As yet, none of them have made public statements about the buyback effort. A source with inside knowledge of their thinking was quoted as saying in the Bloomberg report, “We’re dedicated to resolving this issue while meeting all regulatory needs and keeping the integrity of the tech we’ve developed. This isn’t simply a matter of finances, it’s about the role of agentic AI in the current geopolitical context, another source close to the conversations added.
The tension found in this story is perfectly encapsulated by those quotes. The founders do not just want to undo a business deal. They’re experiencing what could be the world’s biggest duel between two of the planet’s top economies over the future of independent systems. Meta, meanwhile, has yet to comment on the reported buyback negotiations in the open market. The company, however, is mulling over its choices within its ranks. If 2 billion dollars could be walked away with, that may be ok, but the precedent set by a forced sale would likely have a dampening effect on future Chinese purchases.
