Kuaishou's AI video division Kling raises $2 billion ahead of Hong Kong IPO

Kuaishou has raised about $2 billion from investors for its AI video division, Kling. The funding round brought in 13.82 billion yuan ($2.04 billion), the Wall Street Journal reported, pushing the unit's valuation to $18 billion. CPE, Guofang Investment, BlueFive, Tencent, and Citic Securities are leading the round.

More investors could still join, which would push the total to as much as $3 billion. Kuaishou's stake in Kling would then fall to 68.33 percent. Sources familiar with the matter said as early as May that Kuaishou planned to spin off Kling and list it on the Hong Kong Stock Exchange.

Kling is seen as a core part of the business but is still in the early stages of making money. The move puts Kling in a growing wave of Chinese AI companies lining up for IPOs in Hong Kong. MiniMax and Zhipu AI recently went public, some backed by the same strategic investors like Tencent and Alibaba.

In the video market, Kling competes with tools like Google's Veo 3.1, Runway's Gen-4.5, and ByteDance's Seedance. The company recently unveiled its Kling 3.0 video model. Why this matters: The successful fundraising by Kling underscores the growing investor interest in AI video technology, a sector that is increasingly crowded with new entrants.

This development has significant implications for the broader industry, as it signals a potential shift towards more AI-generated content. For developers and businesses, Kling's advancements in AI video creation could provide new opportunities for content production and distribution. However, questions remain about the unit economics of AI video generation and Kling's path to profitability.

As the Hong Kong IPO market continues to attract Chinese AI companies, investors will be closely watching Kling's growth and competitive positioning against established players like Google and ByteDance.