Chinese short video platform Kuaishou has announced that its artificial intelligence video division, Kling AI, is seeking to raise approximately US$3 billion in its first external fundraising round, according to a filing submitted to the Hong Kong Exchanges and Clearing. The financing effort, disclosed Thursday evening, involves a broad coalition of investors, including major Chinese technology companies, state-backed funds, and media industry players.
Notable participants in the round include Baidu, Alibaba’s cloud unit, and Tencent. State-affiliated investors such as the Beijing Information Industry Development Investment Fund and the Beijing Artificial Intelligence Industry Investment Fund are also involved. Additionally, the funding attracts film and entertainment firms like Huaile Film & TV and Mango Investment, reflecting growing interest in AI video applications across the media sector.
This funding round marks one of the largest globally for a company specializing in AI video models, underscoring intensified competition in the rapidly advancing sector. Earlier in the year, ByteDance, a key Chinese competitor, unveiled its Seedance 2.0 AI video model, which impressed yet unsettled some in the entertainment industry due to its capacity to generate highly realistic videos, raising concerns about potential disruption to traditional film and television production workflows and employment.
Kuaishou’s AI unit, Kling, launched its 3.0 model series in February, emphasizing enhanced narrative control and improved consistency in AI-generated video content. The division generates revenue through individual subscriptions and enterprise API services, with international markets contributing around three-quarters of its income. Following the introduction of the 3.0 model, Kling’s annualized revenue estimates increased sharply, from US$300 million in January to about US$500 million in March.
Experts suggest that spinning off Kling for external investment could alleviate some of the financial pressures Kuaishou faces, given the capital-intensive nature of AI development. Wu Xiuxue, an analyst at Hangzhou-based consultancy 100ec.cn, described AI video generation as a sector with “high-rising capital expenditure” and characterized it as a “black hole” for computing resources. Analysts from CCB International noted that the spin-off could uncover latent value by transforming Kling from a cost center subsidized by its parent company into a financially self-sustaining entity.
Despite the funding ambitions and market potential, Wu cautioned that AI video tools are still far from profitability, emphasizing that Kling’s future success depends on its ability to leverage funding, technological advantages, and market position into durable profits.
The proposed US$3 billion fundraising round values Kling at about US$18 billion, close to 80 percent of Kuaishou’s market capitalization of approximately HK$182 billion as of Thursday. The announcement had a muted effect on the parent company’s stock, which closed marginally lower by 0.09 percent at HK$42.60 on Friday.