The U.S. Treasury Department has been very engaged and supportive in reviewing Benchmark’s recent investment. On Manus AI, an extremely promising startup that’s building the world’s first artificial intelligence agents. This increased scrutiny is a result of new compliance issues associated with the 2023 restricted investments. It’s very easy to miss that Manus AI is not considered a China-based company. The 3-year-old startup beat out SpaceX and raised the full $75 million with Benchmark Capital leading the charge at a $500 million valuation.
No wonder Manus AI has recently shot towards the top of all AI related startups. Rather than trying to build its own technology, the company is developing a “wrapper” around generative AI models that are already out there. The company’s incorporation in the Cayman Islands allows it a unique structure commonly used by Chinese firms to attract foreign capital, similar to practices seen with major corporations like Alibaba. This peculiar structure has allowed Benchmark’s legal team to conclude that this weird structure means their investment is above-board with current regulations.
The major investment has garnered widespread pushback from these same industry stakeholders. Delian Asparouhov, a partner at Founders Fund, expressed his displeasure on the social media site X. He mocked Benchmark’s decision to invest and said, “What? Wow, actions have consequences?” His comments point to larger fears about capital flows from abroad into technology companies, especially those that could use their resources to develop technology with national security implications.
Right now, the U.S. Treasury Department is probing Benchmark Capital’s ties to Manus AI during the course of its own compliance review. The department wants to avoid putting U.S. firms in the position of inadvertently supporting those companies that could pose a threat. It better helps to ensure compliance with regulatory guidelines on foreign investments.
As of publication, Benchmark, Manus AI, and the U.S. Treasury declined to comment on our questions. We look forward to seeing how this review will shape the investment environment within the tech sector. The result of this audit has broad implications for how we fund future, similarly-structured startups that work under similar gating structures.
Leave a Reply