The funding round raised $2.79 billion and reportedly values Kling AI at around $15 billion.
Kuaishou, a Beijing-based short-video platform, said it raised the money from a group of backers including Tencent and 21 independent investors. After the deal, Kuaishou's ownership stake in the subsidiary will drop to 68%.
The $200 million from Tencent stands out given that the company operates its own AI model, Hunyuan, which competes directly with Kling AI in China. Yet Tencent decided to back a rival's subsidiary.
Kuaishou's main app has 700 million monthly active users. Those users spend an average of more than 130 minutes per day on the platform. The AI subsidiary claims more than 60 million global creators use its tools.
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The Chinese market for AI video generators is intensely competitive. Kling AI's $2.8 billion raise gives it a large war chest to compete.
Kuaishou said Kling AI is increasingly targeting growth outside China. The company wants to compete globally against other AI video tools. The $2.8 billion will help fund that expansion.
The dilution of Kuaishou's stake to 68% leaves outside investors with a larger piece of the AI business. For now, the market seems cautious.
Kuaishou's decision to raise such a large sum underscores the high stakes in the AI video generation race. The investment from Tencent, despite competition, signals a potential willingness to collaborate in a fast-growing field.
Kuaishou's standing as the second-biggest short-video app in China, with 700 million people using it each month and averaging over two hours daily, creates a sturdy launching pad for Kling AI. The AI video generation market is heating up globally, with players like OpenAI's Sora and China's own ByteDance also vying for share. Kling AI's $2.8 billion war chest positions it to invest heavily in research, talent, and international marketing.
The infusion of capital comes as Chinese tech giants race to develop generative AI video tools, with ByteDance's Doubao and Jimeng, as well as Tencent's Hunyuan, all competing for market share. Kling AI's target valuation of $15 billion would place it among the most valuable AI startups globally, reflecting the immense demand for video generation capabilities. The funding will likely accelerate development cycles and intensify competition across the sector.
Kling AI's international push will determine if this $2.8 billion bet pays off for Kuaishou and its investors.
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