Meta Acquires Singapore’s Butterfly Effect, Maker of Manus AI, for $2 Billion in Third-Largest Deal

Silicon Valley – EcoPulse24

Meta Platforms announced on December 29, 2025, that it has acquired Singapore-based Butterfly Effect, the parent company of AI agent Manus, in a deal valued at about $2 billion (Wall Street Journal), making it Meta’s third-largest acquisition after WhatsApp and its investment in Scale AI.

The deal was completed in a record 10 days, surprising even early investors. Liu Yuan, partner at ZhenFund, remarked, “The speed was so crazy we wondered if the offer was real.”

Xiao Hong, 33, founder of Butterfly Effect and a graduate of Huazhong University of Science and Technology, will join Meta as Vice President. Butterfly Effect will continue to operate independently from Singapore, with its technologies gradually integrated into Meta’s products including Meta AI, Facebook, Instagram, and WhatsApp.

Manus is a general-purpose AI agent capable of handling complex tasks autonomously. Launched on March 6, 2025, it quickly attracted over 2 million users to its waitlist in the first week and built a Discord community of 138,000 members within days. Manus can perform tasks such as resume screening, trip planning, stock portfolio analysis, market research, coding, and website building - all via virtual cloud computers running even when the user is offline.

Importantly, Manus is a revenue-generating product. By mid-December 2025, it reached $100 million in annual recurring revenue (ARR), becoming the world’s fastest startup to achieve this milestone. Bloomberg reports total annualized revenue exceeds $125 million, mostly from paid subscriptions at $39 or $199 per month.

Butterfly Effect began in Wuhan, China, in 2022, founded by Xiao Hong, who previously launched Nightingale Technology in 2015. The company’s first product, Monica, was a browser extension AI assistant that attracted over a million users and achieved rare profitability in China’s AI sector. In early 2024, ByteDance offered $30 million to acquire the team, but Xiao declined to maintain independence.

With growing US-China tensions, Butterfly Effect moved to Singapore in mid-2025. Benchmark invested $75 million in April 2025 at a $500 million valuation, though the investment was later reviewed by the US Treasury due to AI investment restrictions.

Before Meta’s acquisition, Butterfly Effect completed four funding rounds:
- Feb 2023: Seed round at $14 million (ZhenFund)
- Aug 2023: Angel round at $50 million (ZhenFund)
- Nov 2024: Series A at $85 million (Sequoia China, Tencent, ZhenFund)
- Apr 2025: Series B at $500 million (Benchmark, Tencent, ZhenFund, Sequoia China)

Unlike most AI firms, Manus does not build its own models. It uses a multi-model approach, integrating best-in-class models such as Anthropic’s Claude 3.7 Sonnet and improved versions of Alibaba’s Qwen, dynamically choosing the optimal model for each sub-task. The system operates via cloud-based virtual machines, offering users transparency through “Manus’s Computer.” In 2025, Manus processed 147 trillion tokens and created over 80 million virtual computers. It outperformed OpenAI Deep Research on the GAIA benchmark across all difficulty levels.

Meta confirmed to Nikkei Asia that, post-acquisition, Manus will sever all ties with China, halting all Chinese operations and ownership. The move addresses US national security concerns, especially after scrutiny over Benchmark’s investment.

CEO Mark Zuckerberg has made AI Meta’s top priority, promising over $70 billion in AI infrastructure investment for 2025. While Meta credits AI for improved ad revenues, it has yet to launch a paid AI service, though reports suggest a “Meta AI+” subscription is in testing. Manus provides Meta with a profitable, subscription-based AI product and will remain available as a standalone service while its technology is integrated across Meta’s platforms.

The deal strengthens Meta’s position in the emerging AI agent race. Zuckerberg recently formed Meta Superintelligence Labs, led by Alexander Wang, founder of Scale AI, in which Meta invested $14 billion for a 49% stake. Wang praised the Manus team as “world-class” and confirmed 100 Manus team members have joined Meta in Singapore.

Investors see the deal as a pivotal moment for young entrepreneurs in AI. Liu Yuan of ZhenFund stated, “This generation of young Chinese entrepreneurs has arrived.” Manus’s journey from a $14 million startup in Wuhan in 2022 to a $2 billion Meta acquisition in under three years underscores the importance of speed, execution, and user value. Founder Xiao Hong’s focus on practical AI integration over developing proprietary models has proven successful.