Kuaishou Technology’s Kling AI has raised 19.04 billion yuan, or about $2.8 billion, in a major funding round as the Chinese short-video company moves to spin off and potentially list its fast-growing AI video unit. The deal values Kling AI at about $15 billion on a pre-money basis, while Kuaishou said the round could still expand to as much as $3 billion if more investors join.
Kling AI Funding Round
Kuaishou said on July 3 that investors including Alibaba, Tencent, Baidu and other venture backers are contributing to the Kling AI round. Reuters reported that the company has already secured more than 19 billion yuan in financing, with the possibility of additional investors taking the total higher. Bloomberg and the WSJ both reported that the funding is part of a broader plan to separate the AI video business from Kuaishou and prepare it for a future listing.
The financing has quickly turned Kling AI into one of China’s most closely watched generative video businesses. The company develops AI tools that create videos and short-form content from text prompts, placing it in direct competition with other Chinese AI video players. The size of the round underscores how much investor appetite remains for AI video even as the sector becomes more crowded.
Kuaishou Share Price Reaction
Investor response to the funding announcement was immediate. Reuters reported that Kuaishou shares jumped as much as 6.9% in Hong Kong after the news, before later giving back those gains and closing largely unchanged. Yahoo Finance also noted the initial surge, calling it a sign that the market saw the funding as a major milestone for Kuaishou’s AI strategy.
The share movement reflects how closely investors are tracking Kuaishou’s transition from a short-video platform into a more diversified AI company. Kling AI has become central to that narrative because it represents one of Kuaishou’s most promising growth engines. The market reaction suggests confidence in the AI video unit even as broader tech sentiment remains mixed.
Alibaba And Tencent Backing
The presence of Alibaba and Tencent in the round adds strategic weight to the deal. Reuters said the investors backing Kling include both companies, along with Baidu and several other firms. That combination of large strategic backers gives the financing more credibility and hints at how important AI video has become in China’s broader tech landscape.
The participation of Tencent is especially notable because it has long been a backer in the Chinese internet ecosystem, while Alibaba’s involvement adds another layer of competition and collaboration. Together, the investors appear to be betting that generative video will become a valuable commercial product for creators, advertisers and studios. The deal also signals that big Chinese tech groups still see AI as a priority despite broader market pressure.
Kling AI Valuation And Ownership
Kuaishou said Kling AI was valued at about $15 billion before the latest money came in. The WSJ reported that the post-money valuation could rise to around $18 billion, depending on how much additional capital is eventually committed. Reuters also reported that Kuaishou’s ownership in Kling could fall to about 68% after the dilution from the new financing.
That ownership shift is important because it indicates how serious Kuaishou is about giving Kling more independence. A lower parent stake often goes hand in hand with a more autonomous structure and a clearer path to listing. Bloomberg said the company may raise as much as $3 billion overall, reinforcing the scale of the proposed separation.
AI Video Spinoff Plans
Kuaishou is reportedly preparing to spin off Kling AI and potentially list it in Hong Kong. Reuters said people familiar with the matter had previously indicated that the company was considering an IPO path for the AI video business. The current financing round appears to be laying the groundwork for that process by giving the unit a stand-alone valuation and a wider investor base.
For Kuaishou, the spinoff would help isolate one of its highest-profile growth businesses from the rest of the company. It would also allow investors to value the AI video arm on its own merits rather than as part of a broader short-video platform. That is a common move for companies trying to unlock value in fast-growing AI businesses.
China’s AI Video Race
Kling AI is part of a wider AI video race in China. The company competes with other domestic players such as ByteDance’s Seedance and ShengShu, both of which are also pushing generative video tools. The size of Kling’s fundraise suggests that investors believe there is still room for a major leader in this category.
The competitive context matters because generative video has become one of the most capital-intensive parts of the AI market. Companies need significant funding to train models, maintain compute infrastructure and attract creator users at scale. Kling’s large raise shows that backers are still willing to fund that effort aggressively.
Why It Matters
The Kling AI deal is important because it combines three big themes: AI, spinoffs and cross-border investor appetite. It shows that generative video remains one of the hottest areas in artificial intelligence, especially in China, where major tech groups are still willing to back large rounds despite market uncertainty. It also shows that Kuaishou wants to separate its AI ambitions from its core short-video business to create a more focused growth story.
For investors, the round is a signal that AI video is moving from experiment to strategic asset. For Kuaishou, it may be the first major step toward unlocking value in Kling as an independent company. And for China’s tech sector more broadly, it is another reminder that the race to dominate generative media is still very much on.
