According to The Information, Butterfly Effect, a Chinese startup operating the AI agent Manus, is in talks with US venture capital firms for a new round of funding aiming for a $500 million valuation, a roughly fivefold increase from its previous valuation. The company is seeking tens of millions of dollars to expand the global reach of its AI product.

Manus, an AI agent capable of performing various tasks such as travel booking and stock analysis, has quickly gained traction on X (formerly Twitter). Its popularity is partly fueled by increased US interest in Chinese-made AI products, mirroring the success of Chinese quantitative hedge fund DeepSeek. While primarily targeting the US market, Butterfly Effect has also begun offering Manus in China, recently announcing a partnership with Alibaba Group to leverage domestic AI models and computing platforms.

manus

Image Source: AI-generated image, licensed through Midjourney

Despite heightened US-China tech competition and increased scrutiny of US investment in Chinese AI in recent years, Butterfly Effect is still seeking support from US venture capital firms. Insiders believe that Butterfly Effect's focus on application development (like Manus), rather than training underlying large language models, makes it less likely to be subject to US investment bans. DeepSeek's success is encouraging more US investors to look at Chinese AI innovation.

Butterfly Effect's last funding round, completed late last year at a $100 million valuation, was led by Tencent and Sequoia Capital China, with ZhenFund also participating. This new round is expected to help Manus expand its user base; currently, the company is unable to fully meet demand due to server capacity and operational cost limitations. Reports indicate that Manus spends approximately $2 per task using Anthropic's Claude AI model, exceeding $1 million in Claude model expenses in the first two weeks after launch, with over 2.6 million users on the waiting list.

Furthermore, Butterfly Effect plans to open its first office outside China in Tokyo, strategically expanding into the Japanese market. This funding round will not only fuel product expansion but also support global team growth.