ByteDance spins off AI drug unit that raises $290M

ByteDance has completed a $290 million fundraising for Anew Labs, its newly spun-off AI drug discovery unit headquartered in Shanghai, valuing the business at $1.5 billion in its first external funding round, Reuters reported on Wednesday, citing two people with knowledge of the matter.reuters

The TikTok parent will retain a 56% stake in Anew Labs following the round. The fundraising was led by HSG, formerly known as Sequoia China, alongside IDG Capital and Hillhouse Investment, with 5Y Capital serving as a co-lead investor. Other participants included Gaorong Ventures, Primavera Venture Partners, Boyu Capital, strategic investor SBP Group, and the state-backed Shanghai Future Industries Fund.straitstimes+1

Why the Spin-Off

ByteDance separated the AI drugmaker to better support its long-term development, as AI drug discovery "follows a different industry logic and management approach" than the group's core operations, one of the sources told Reuters. The move marks ByteDance's first step toward commercializing its AI-for-science efforts, according to earlier reporting by Intelligent Emergence, a 36Kr publication.thenextweb+1

Approximately 50 core staff members are expected to move to the new company, along with its algorithms, technology platform, and pipeline assets. Volcano Engine, ByteDance's cloud division, will continue providing computing power. The unit is led by Liu Kai, who spent seven years in venture capital at IDG Capital and Fire Stone Investment before joining ByteDance in 2021.thenextweb

Pipeline and Operations

Anew Labs has developed structure-prediction and protein-design models, including Protenix and PXDesign, along with a small number of drug candidates. In April, Chris Li, who heads the biology department, presented an AI-designed IL-17 inhibitor — one of Anew Labs' four candidates — at the American Association of Immunologists' meeting in Boston.thenextweb

The company has operations in Shanghai, Singapore, and San Jose, California, and listed 36 core team members on its website in May, according to the South China Morning Post. ByteDance and the investors did not immediately respond to requests for comment.reuters+1