Dealmaker

By Julia Hornstein

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Benchmark’s investment in the startup behind the AI agent Manus drew flack last year from some venture capitalists who viewed the investment in the company, which was founded in Beijing, as a national security risk. But when Meta said in December that it was buying the startup, called Butterfly Effect, for over $2 billion, the early-stage venture capital firm’s bet seemed to pay off.

Celebrating that deal may have been premature, though—or perhaps not, given possible legal hurdles in dismantling it. This week, Chinese regulators said they were blocking the sale of the startup, now located in Singapore, to Meta and would force the company to unwind it. But there’s a twist: Benchmark, which led the $75 million round of financing at a roughly $500 million valuation last spring, has already distributed the returns from the transaction, which closed last year, to its investors, according to a person familiar with the matter.

Meta hasn’t said much publicly about its plans. If it goes through with the divestiture, though, it would be difficult for Meta to get its money back from Manus’ investors, Frank Aquila, an M&A lawyer at Sullivan & Cromwell, said.

Unwinding the closed transaction would set a “dangerous” standard for companies hoping to do cross-border deals and would be “close to unprecedented and almost impossible to put the ‘genie back in the bottle,’” Aquila said in an email.

The Manus sale was the first of three announced exits from Benchmark’s portfolio in the past five months, notable since each partner at the firm may make only one or two investments a year.

These include AI chip startup Cerebras Systems, which made its IPO prospectus public this month and is eyeing a $35 billion-valuation debut. Meanwhile, SpaceX announced last week that it has the right to acquire vibe-coding startup Cursor for $60 billion or pay a $10 billion breakup fee.

Benchmark led Cerebras’ Series A in 2016 at a $35.5 million valuation, according to data firm PitchBook. It also invested in multiple subsequent funding rounds, including $250 million total into Cerebras’ last two private funding rounds that valued the startup at roughly $8 billion and $23 billion, according to a Cerebras filing. Benchmark now owns at least 5% of Cerebras, and its stake could be much bigger: Benchmark typically likes to own over 20% of its portfolio companies, though these stakes can get diluted over time.

The firm is also willing to take smaller shares to win deals. That was the case with Cursor, we reported last year. When Cursor raised money at a $2.5 billion valuation in early 2025, Benchmark put in just $20 million for a less than 1% stake. Its stake is still under 1%, Bloomberg reported last week.

Payouts from Cursor and Cerebras are still weeks or months in the future, given expected lock-ups that will restrict investors’ sales of Cerebras shares—and the uncertainty over SpaceX’s Cursor acquisition. At least with Manus, Benchmark’s LPs have cash in hand.

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