Manus raises $1B

Manus has secured commitments to raise $1 billion in a bid to regain independence from Meta, following a regulatory intervention by Chinese authorities that halted Meta's $2 billion planned acquisition of the company. The move comes after China instructed Meta to unwind the acquisition, citing violations of foreign investment and technology export regulations. As a result, since early June, Manus and its employees have been barred from accessing Meta's internal systems, effectively isolating the company from the tech giant.

The $1 billion fundraise, led by Manus founders Xiao Hong, Ji Yichao, and Zhang Tao, is expected to enable the reacquisition of the company at a valuation comparable to Meta's initial purchase price. The founders are currently engaging in discussions with external investors to source the necessary capital, though details of investor commitments remain uncertain. Following the reacquisition, the plan is to establish a joint venture in China, with an eventual goal of launching an IPO in Hong Kong.

This strategic move is driven by the founders’ intent to maintain Manus as an independent entity, preserving its value post-separation from Meta. Despite the regulatory demands which dismantled the acquisition, Manus continued to innovate, integrating features with platforms like Similarweb and Shopify, while maintaining external connectivity, including with Meta's services. This has allowed the company to safeguard its operational viability as an independent asset.

The halting of the Meta-Manus acquisition reflects a broader tightening of cross-border technology deals by China, emphasizing national security and regulatory oversight. The dismantling marks China's first enforcement action under its Foreign Investment Security Review Measures to reverse a consummated transaction. Despite this setback, Meta reportedly managed to partially integrate Manus’ AI technology into its operations, mitigating the potential impact of the acquisition's reversal.

Going forward, the completion of Manus's $1 billion funding initiative is pivotal for the founders to negotiate the buyback of the company’s assets from Meta, particularly given the restructuring necessitated by the payout received by early investors, including Tencent, ZhenFund, and Sequoia China. The situation underscores the increased scrutiny Chinese authorities are applying to foreign technology investments, presenting complex challenges for similar future transactions.