US Probes Benchmark's China AI Startup Deal

Cansın Cengiz

Cansın Cengiz

— 1 min read

The United States Treasury Department is reportedly examining Benchmark Capital's recent investment in Manus AI, a promising Chinese AI agent startup. This review aims to determine if the investment complies with 2023 U.S. restrictions designed to limit American capital flowing into certain Chinese technology companies.

Manus AI: Funding and Focus

Manus AI has quickly gained attention in the AI agent sector, recently securing $75 million in a funding round led by Benchmark. This investment valued the startup at approximately $500 million, highlighting strong investor confidence in its potential.

Investment Under Scrutiny

According to a report by Semafor, the Treasury's review is focused on adherence to an executive order from August 2023 restricting U.S. investments in Chinese firms involved in sensitive technologies like artificial intelligence.

Benchmark's legal counsel had reportedly approved the investment, arguing that:

  • Manus AI functions as a "wrapper" utilizing existing AI models, rather than developing its own foundational AI, potentially placing it outside the direct scope of the restrictions.
  • The startup is incorporated in the Cayman Islands. This is a common practice for many Chinese companies, including Alibaba, to access foreign capital and navigate international regulations.

Industry Reaction

The deal has sparked discussion in the tech and venture capital sphere. Delian Asparouhov, a partner at Founders Fund, commented on X (formerly Twitter) regarding the news, stating, "wow, actions have consequences?".

Currently, Benchmark, Manus AI, and the U.S. Treasury Department have not issued public statements regarding the review. The outcome of this examination could set a precedent for future U.S. venture capital investments in AI companies with connections to China.

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