Kuaishou announced Thursday that its AI‑driven video generation arm, Kling AI, has closed an initial $2 billion venture‑capital round. The round may swell to $3 billion if additional investors join, which would push the post‑money valuation to roughly $18 billion and reduce Kuaishou’s ownership to about 68 percent, according to the company’s filing.

The pre‑money valuation stood at $15 billion, Bloomberg reported. Tencent is among the new backers, joining Kuaishou’s existing shareholders. The financing marks Kling’s first external capital injection since Kuaishou began exploring a spin‑off earlier this year.

Kling AI specializes in turning text prompts into short films and video clips, a capability that has attracted advertisers, creative studios, and professional filmmakers. The service fills a gap left by OpenAI’s Sora, which the company discontinued in March after high compute costs and dwindling user interest. Competitors include ByteDance’s Seedance and the Shanghai‑based startup Shengshu, but Kling’s rapid revenue growth suggests it is gaining traction.

Growth and market positioning

Annual recurring revenue climbed to about $500 million in March, up from $300 million in January, Bloomberg said. First‑quarter earnings hit 650 million yuan (approximately $96 million), more than triple the figure a year earlier. The surge follows the launch of Kling’s third‑generation model, which promises higher quality output and faster generation times.

Industry observers note that the Chinese AI sector is experiencing a wave of large‑scale funding as Beijing pushes domestic champions to stay competitive globally. Kling’s ambitious plan includes a potential initial public offering in 2027, a timeline Kuaishou’s board has been evaluating as part of a broader restructuring of the unit’s assets.

Whether the company can sustain its growth remains an open question. The professional video market is still nascent, and past AI‑generated media tools have struggled with user attrition after early hype. Still, Kling’s sizable funding, strong backers, and accelerating revenue give it a solid foundation to pursue its vision of becoming a cornerstone of AI‑powered content creation.

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