Founded less than three years ago, acquired by Meta for billions of dollars! Manus becomes the "new benchmark for Chinese entrepreneurship in the AI era."
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Meta acquired the AI startup Manus for billions of dollars, making this the social media giant’s third-largest acquisition deal since its founding, only behind WhatsApp and Scale AI. This deal marks a new phase in Meta’s aggressive investment strategy in AI, and also sets a new benchmark for Chinese entrepreneurs in the global AI race.
On Tuesday, according to LatePost, Manus’s parent company Butterfly Effect was preparing a new round of financing at a $2 billion valuation before being acquired. The entire acquisition negotiation was completed in a very short time, just around ten days. After the acquisition, Butterfly Effect will remain independently operated, and founder Xiao Hong will become a Meta Vice President.
According to Bloomberg, Manus’s annual recurring revenue earlier this year has reached $125 million, selling AI agents to enterprises via subscription services. This acquisition will provide Meta with more direct income returns from its massive AI investments. Meta CEO Mark Zuckerberg has already made AI the company’s top priority and has pledged to invest $600 billion over the next three years into US infrastructure projects, most of which are related to AI.
This move comes as Meta faces investor skepticism. Though the company has poured huge sums into AI R&D, including hiring a high-paid research team this summer to develop the new-generation AI model scheduled for release next spring, the market is concerned whether these expenses can generate meaningful revenue in the short term.
A Rapidly Rising AI Star
Butterfly Effect was founded in 2022 by Xiao Hong, a graduate of Huazhong University of Science and Technology, who began his entrepreneurial journey in Wuhan. According to LatePost, Xiao Hong previously developed two WeChat ecosystem plugins: the official account formatting tool Yiban and the enterprise WeChat CRM tool Weibian, both of which were sold to a unicorn company.
The company’s first product was the browser AI plugin Monica, offering chat, search, reading, writing, and translation functions driven by large models. Although it was criticized as a “shell” product at the time, Monica became one of the few profitable products in China’s AI industry.
In 2024, post-90s serial entrepreneur Ji Yichao and product manager Zhang Tao joined the team to co-develop Manus. This AI agent product, capable of deploying different tools to solve complex problems, was launched in March 2025 and immediately attracted domestic and international attention. Manus can perform tasks like filtering resumes, creating travel itineraries, and analyzing stocks. In mid-December this year, Manus announced that its annual recurring revenue exceeded $100 million.
Capital’s Rapid Pursuit
According to LatePost, before being acquired by Meta, Butterfly Effect completed four rounds of financing: Seed round in February 2023 with a post-investment valuation of $14 million (ZhenFund as investor); Angel round in August 2023 with a post-investment valuation of $50 million (ZhenFund as investor); Series A in November 2024 with a post-investment valuation of $85 million (investors include Sequoia China, Tencent, ZhenFund, Wang Huiwen, Old Friendship Capital); Series B in April 2025 with a post-investment valuation of close to $500 million (investors include Benchmark Capital, ZhenFund, Sequoia China, Tencent, and top VC funds and tech entrepreneurs from China and the US).
Bloomberg reports Manus’s parent company was originally founded in China before relocating to Singapore, and earlier this year, financing led by US VC Benchmark valued the firm at nearly $500 million.
Liu Yuan, ZhenFund partner and Butterfly Effect angel investor, said the acquisition talks “were so fast we even wondered if it was a fake offer.” He believes this will be a tremendous inspiration for the new generation of young entrepreneurs in the AI era. “The time belonging to China's generation of young entrepreneurs has already arrived.”
Meta’s AI Strategic Layout
Meta is actively competing in the AI race with rivals like OpenAI, Google, and Microsoft. According to Bloomberg, the company has assembled a highly paid research team to develop an advanced new AI model set for release next spring. Meta currently has the Meta AI chatbot available on Facebook, Instagram, and WhatsApp social media and messaging platforms, as well as in its AI glasses product.
Meta stated in an announcement that it will continue to operate and sell Manus services and integrate them into the company’s products. The company will acquire Manus’s technology and leadership team but did not reveal the team's specific position within the organization. This summer, Meta’s Chief AI Officer Alexandr Wang joined Meta as a part of a high-profile investment in his startup Scale AI.
ZhenFund managing partner and former Jumei co-founder Dai Yusen stated: “Manus is no longer just a startup, but a symbol of the new generation of China’s entrepreneurial spirit and hope. They don’t rely on connections, nor compare credentials, but openly compete on the global stage, accomplishing what our previous generation of entrepreneurs couldn’t even do or dare to imagine.”
In an open letter this July, Zuckerberg wrote: “Superintelligence will usher in a new era of personal empowerment: it will allow people more powerful agency, letting us build the world in the way we want.” The multibillion-dollar acquisition of Butterfly Effect is an important step in advancing Zuckerberg’s vision of “superintelligence.”
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