Kuaishou Spins Off Video AI Unit, Kling AI Raises $2 Billion
▼ Summary
– Kling AI, a video generation unit of Kuaishou, raised $2 billion in venture funding, with potential to reach $3 billion, at a pre-money valuation of about $15 billion.
– The funding round is Kling’s first outside investment since Kuaishou began exploring a spinoff, and an IPO is targeted for 2027.
– Kling generates videos from text prompts, competing with ByteDance’s Seedance and Shengshu, and aims to fill the void left by OpenAI’s shutdown of Sora.
– Kling’s annual recurring revenue grew from $300 million in January to $500 million in March, with first-quarter revenue tripling year-over-year to about $96 million.
– The raise is part of a wave of Chinese AI funding, but Kling’s long-term success depends on whether the professional video market proves durable without the user attrition that killed Sora.
Kling AI, the video generation arm of Chinese tech giant Kuaishou, has secured an initial $2 billion in venture capital funding as part of a planned spinoff and eventual IPO, the company announced Thursday. The round could expand to roughly $3 billion if additional investors join, which would reduce Kuaishou’s ownership stake to about 68 percent, according to a company statement. A pre-money valuation of approximately $15 billion was reported by Bloomberg, citing the filing.
This marks Kling’s first external capital raise since Kuaishou began exploring a separation earlier this year. The valuation landed below the $18 billion to $20 billion range discussed in earlier negotiations. The South China Morning Post identified Tencent as one of the investors, placing the post-money valuation near $18 billion. Kuaishou’s board had previously reviewed a restructuring plan for Kling’s assets, and The Information reports that an IPO is 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. Sora failed to retain users while burning roughly $1 million per day in compute costs. Kling now competes directly with ByteDance’s Seedance and the startup Shengshu, supplying clips to professional filmmakers, advertisers, and creative studios. The company is aggressively moving to fill the global gap left by Sora’s exit.
Growth has been rapid. Annual recurring revenue hit roughly $500 million in March, up from $300 million in January, fueled by the launch of the third-generation Kling model, according to Bloomberg. First-quarter revenue topped 650 million yuan (about $96 million), more than triple the figure from a year earlier.
This fundraise 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.
(Source: The Next Web)
