ByteDance’s AI drug unit Anew Labs raises $290M at $1.5B valuation, Reuters reports

ByteDance closed a $290M funding round for Anew Labs, its newly spun-off AI drug discovery unit, at a $1.5B valuation, Reuters reports, citing two sources familiar with the matter. Moreover, the company that owns TikTok will retain 56% of the business after this round, according to the same sources. 

According to the same reporting, HSG, the company previously called Sequoia China, headed the transaction together with IDG Capital and Hillhouse Investment; 5Y Capital, acting as a co-lead, Gaorong Ventures, Primavera Venture Partners and Boyu Capital also took part, together with the state-supported Shanghai Future Industries Fund, while SBP Group became a strategic investor.

The spin-off was first mentioned a few days earlier by Intelligent Emergence, a 36Kr publication, which stated that approximately 50 of the core staff would move to the new company, along with its algorithms, technology platform, and pipeline assets.

 Volcano Engine, ByteDance’s cloud division, will continue to provide the computing power. The team is headed by Liu Kai, who, as the Sina Finance report notes, had been engaged in venture capital at IDG Capital and Fire Stone Investment for seven years before joining ByteDance in 2021. His previous firm is now one of the leading investors in the round.

According to Reuters sources, the split was intended to promote the unit’s long-term development, since AI-driven drug discovery follows a different industry logic and management approach from ByteDance’s other businesses; Intelligent Emergence described the move as the company’s first step toward commercializing its AI-for-science efforts.

The company has led the development of structure-prediction and protein-design models, such as Protenix and PXDesign, as well as a small number of drug candidates. In April, Chris Li, who heads the biology department, showed off an AI-designed IL-17 inhibitor, one of Anew Labs’ four candidates, at the American Association of Immunologists’ meeting in Boston.

As the South China Morning Post reported, Anew Labs has operations in Shanghai, Singapore, and San Jose, California, and listed 36 core team members on its website in May.

For Jack Ma, who owns TikTok and CapCut, holding a majority stake in a drug development company with four candidates but no approved medicines is an unusual move for its portfolio.