Kling AI raises $2B as Kuaishou eyes Hong Kong IPO

Kuaishou Technology's spun-off AI video unit Kling AI has secured an initial $2 billion in venture capital funding, valuing the company at approximately $18 billion post-money, as the Chinese startup positions itself for a Hong Kong initial public offering within the next 12 months.

The round could expand to roughly $3 billion as additional investors join, Kuaishou said in a statement on Thursday. Tencent, a major Kuaishou shareholder, participated in the funding.finance.biggo+2

Record Round for AI Video

The fundraising represents the largest single funding round for a Chinese AI video generation company to date. Bloomberg first reported the closing of the initial $2 billion tranche, noting that further investors could still participate. The South China Morning Post had earlier reported that the round was nearing completion at the $3 billion level.scmp+3

The $18 billion valuation marks a reduction from Kuaishou's initial target of $20 billion, which the company adjusted to match investor appetite. General Atlantic was in discussions to lead the round when talks were first reported in mid-June.news.bloomberglaw+2

Rapid Revenue Growth Fuels Valuation

Kling AI's annual recurring revenue grew from $240 million in December 2025 to $500 million by April 2026, a pace that underpins the $18 billion valuation. Kuaishou raised its full-year 2026 revenue guidance for the unit from $300 million to $500 million ARR. J.P. Morgan analysts have projected Kling could reach $1.3 billion ARR by the first quarter of 2027.aiweekly+2

The company plans to file a Hong Kong listing application in early 2027, with the current round structured as pre-IPO financing. Kuaishou first announced plans in April to spin off Kling AI, and the unit's $18 billion pre-money valuation represents roughly two-thirds of its parent company's market capitalization.kr-asia+1

Competitive Landscape

Kling AI's rise comes as competition intensifies in the generative video space. OpenAI shut down its video generation model Sora at the end of 2025, leaving the field increasingly dominated by Chinese players. Kling AI launched its 3.0 model in early 2026 with enhanced narrative control, photorealistic consistency, and multilingual audio generation.finance.yahoo+1

Kuaishou plans to initiate Kling AI's IPO process in Hong Kong within the next 12 months, a timeline that would place it among a wave of Chinese AI companies seeking public listings on the exchange.news.futunn