Kling AI raises two billion dollars as Kuaishou spins off its fastest-growing business

TL;DR

Kling AI has raised two billion dollars from venture investors as Kuaishou spins off its AI video unit ahead of a planned IPO.

Kling AI, the video generation unit of Chinese tech company Kuaishou, has raised an initial two billion dollars in venture capital funding, the company said on Thursday. Further investors could still join the round, potentially pushing the total to roughly three billion dollars and diluting Kuaishou’s stake to about 68 percent, according to Kuaishou’s statement. The company’s pre-money valuation was about 15 billion dollars, Bloomberg reported, citing the filing.

The round marks Kling’s first outside funding since Kuaishou began exploring a spinoff earlier this year, and it lands at a lower valuation than the 18 to 20 billion dollars that had been discussed in earlier negotiations. The South China Morning Post reported that Tencent is among the investors in the round, which values the company at roughly 18 billion dollars on a post-money basis. Kuaishou had previously said its board was evaluating a restructuring plan for Kling’s assets, and The Information has reported an IPO is being targeted for 2027.

Kling generates videos and short films from text prompts, a category that OpenAI effectively abandoned when it shut down Sora in March after the tool failed to retain users and burned through roughly one million dollars per day in compute costs. Kling competes with ByteDance’s Seedance and the startup Shengshu in delivering clips for professional filmmakers, advertisers, and creative studios, and it is moving to fill the global void that Sora’s departure created.

The business has been growing rapidly. Kling’s annual recurring revenue reached roughly 500 million dollars in March, up from 300 million dollars in January, a surge driven by the launch of the third-generation Kling model, according to Bloomberg. First quarter revenue topped 650 million yuan, equivalent to about 96 million dollars, more than triple the figure from a year earlier.

The raise is part of a broader wave of Chinese AI companies pulling in large rounds as Beijing pushes to keep its champions funded domestically. Whether Kling can sustain its growth trajectory long enough to justify a listing at these valuations will depend on whether the professional video market it is targeting proves durable, or whether AI-generated video follows the same pattern of initial excitement and rapid user attrition that killed Sora.

Get the TNW newsletter

Get the most important tech news in your inbox each week.