Kling AI Closes $2.79B Round at $18B Valuation With Tencent

Kuaishou’s Kling AI raised 19 billion yuan ($2.79 billion) in its first external funding round, according to a Hong Kong stock exchange filing released after Thursday’s market close. The Chinese video generation subsidiary is targeting a US$3 billion close at an $18 billion post-investment valuation, with the round expanding as more investors join. Kuaishou’s Hong Kong-listed shares rose as much as 6.89% at Friday’s open before paring gains.

Tencent invested $200 million in the round, with 21 independent investors joining alongside, according to a CNBC report on the regulatory filing. Kuaishou’s own stake in Kling AI will dilute to 68% as a result of the raise, with the deal capping a year in which the unit moved from a Kuaishou in-house tool to the world’s most valuable standalone AI video business by post-investment valuation.

Kling AI’s First External Round

The capital injection is the largest by an AI video model firm globally, according to people familiar with the matter. A source close to the deal told the South China Morning Post that the round sits at $18 billion post-money, with Kuaishou expecting to start Kling AI’s Hong Kong listing process within 12 months. A Kling AI listing would extend Hong Kong’s run as a destination for mainland AI issuers.

The $18 billion post-investment valuation narrowed from an initial $20 billion target set in April, when Kuaishou first planned to spin off Kling AI. The lower target reflected shifting market sentiment for the unit, one source said, as competition in Chinese AI video generation intensified. Kuaishou’s share price closed at HK$41.60 ($5.30) on Wednesday before the filing. The deal is the first concrete pricing detail since the May restructuring talk, and the largest single AI video raise on record by post-investment valuation.

Kuaishou first signalled the restructuring on May 12, when it told the Hong Kong exchange it was “assessing a proposal to restructure” Kling AI that could involve external investors. Caixin reported at the time that the proposal remained preliminary, with no definitive agreements signed. That posture changed in the weeks leading into Thursday’s filing, when Kuaishou began circulating term sheets to a curated list of strategic and state-backed backers.

The Investor Roster

Tencent’s $200 million participation makes the gaming and social media giant both an investor in and a competitor to Kling AI. Tencent owns Hunyuan, a generative AI platform positioned as a domestic rival to Kling. The decision to fund a competitor reflects a deliberate strategy: own exposure to whichever AI video model wins in China, regardless of which one Tencent runs in-house. The pattern holds whether or not Tencent’s own model wins, since the bet pays off in either case.

Beyond Tencent, the round drew 21 independent investors from sectors spanning technology, entertainment, and state-backed capital, per details of the $2.79 billion first close. Kuaishou did not immediately respond to requests for comment on the full roster, and SCMP sources did not name all 21 backers. The mix of state-backed capital alongside a private sector giant like Tencent mirrors the structure of recent Chinese AI financings, where Beijing’s municipal and provincial funds have moved to anchor rounds for flagship models.

The Tencent investment lands at a moment when the same state-backed investors have been writing larger cheques into AI infrastructure plays. Hong Kong listing talks place the eventual IPO in a venue already trading mainland tech listings at scale, and the listing process is expected to begin within 12 months of the close.

Why Tencent Is Backing a Rival to Hunyuan

Tencent’s $200 million is small relative to a round eventually targeting $3 billion. The size of the cheque, rather than the dollar figure, signals Tencent’s posture: a strategic stake that preserves optionality without elevating a competitor into a balance-sheet threat. A larger cheque would have forced Tencent to either defend the position publicly or treat Hunyuan as a legacy bet.

Tencent has historically taken concentrated positions in Chinese AI labs through its investment arm, and the Kling investment fits a pattern of placing wagers across the field rather than concentrating behind its in-house Hunyuan. Hunyuan remains Tencent’s own product. Kling becomes Tencent’s exposure to whichever generative video model emerges dominant in China’s market.

• 60 million creators served worldwide
• 600 million videos produced to date
• 30,000 enterprise clients across film and advertising
• 1 billion yuan ($147 million) in cumulative revenue by 2025
• 340 million yuan ($50.1 million) in Q4 2025 revenue

Kuaishou’s commercial traction is what makes the wager legible. Kling AI serves more than 60 million creators worldwide, and the unit has produced more than 600 million videos since launching in June 2024, per Kuaishou’s investor relations. The logic tracks the broader pattern of US tech majors holding minority positions in competitor-adjacent AI businesses, and Chinese AI investors have begun copying the structure.

The Hollywood Reckoning Seedance 2.0 Triggered

Kling AI’s raise lands three months after ByteDance’s Seedance 2.0 model reignited Hollywood’s copyright wars. The model launched in mid-February and quickly drew cease-and-desist letters from Disney and Paramount, along with public condemnations from the Motion Picture Association and SAG-AFTRA. The same IP pressure is reshaping the AI video leaderboard, where BACH debuted at No. 6 in April from a Singapore base.

The trigger was an X user posting a brief video showing Tom Cruise fighting Brad Pitt, which they said was created with a two-line prompt in Seedance 2.0. “Deadpool” screenwriter Rhett Reese replied on X: “I hate to say it. It’s likely over for us.” TechCrunch reported the clip went viral and drew a statement from MPA CEO Charles Rivkin demanding ByteDance “immediately cease its infringing activity,” part of a wave of cease-and-desist letters ByteDance received within days.

In a single day, the Chinese AI service Seedance 2.0 has engaged in unauthorized use of U.S. copyrighted works on a massive scale.

Charles Rivkin, CEO of the Motion Picture Association, in a statement reported by TechCrunch.

Disney’s cease-and-desist accused ByteDance of a “virtual smash-and-grab of Disney’s IP” and claimed the company was “hijacking Disney’s characters by reproducing, distributing, and creating derivative works featuring those characters.” Paramount followed suit a day later, alleging that Seedance content was “often indistinguishable, both visually and audibly” from its franchises. SAG-AFTRA called Seedance 2.0 evidence of “the blatant infringement enabled by Bytedance’s new AI video model.”

The episode lifted the IP ground under every Chinese AI video model and forced competitors to differentiate on guardrails. Kling AI’s 3.0 series, launched Feb. 5, 2026, just weeks before Seedance 2.0’s collapse, leans on enterprise and creator controls, native audio across languages, and 15-second photorealistic video as its competitive moat. The positioning matters most in Hollywood, where Kling’s enterprise pitch is now competing against a ByteDance rival busy issuing legal counter-fire.

Kling AI’s Numbers Going Into the Money

The Kling 3.0 lineup includes Video 3.0, Video 3.0 Omni, Image 3.0, and Image 3.0 Omni, all built on Kuaishou’s Multi-modal Visual Language (MVL) framework. The series supports text, image, audio, and video input and output inside one model, generates up to 15 seconds of photorealistic video, and ships with native multi-language dialogue and an intelligent multi-shot storytelling engine. Details of the 3.0 launch are in Kuaishou’s official investor-relations announcement. Kling AI 3.0 is now available for exclusive early access to Ultra subscribers.

Kling AI is generating real revenue. Sources cited on the $50.1 million Q4 2025 revenue figure put Kling AI’s fourth-quarter revenue at 340 million yuan, with Caixin reporting cumulative revenue above 1 billion yuan ($147 million) by year-end 2025. That revenue base gives the round’s investors something to value beyond user counts.

The 3.0 launch came with an “every user is a director” pitch, positioning Kling as the model of choice for studios and ad agencies that want native multilingual audio and brand-accurate text rendering. Kling’s enterprise client count, more than 30,000 according to Kuaishou’s investor relations, signals how that pitch is converting. Kuaishou’s own 2026 capital spending could reach 26 billion yuan ($3.83 billion), per Tech in Asia, and a portion of the IPO proceeds will fund Kling’s compute and data centre buildout.

The Hong Kong Listing Inside 12 Months

A source close to the deal told SCMP that Kuaishou expects to start Kling AI’s Hong Kong stock exchange listing process within the next 12 months. Morgan Stanley said in a May report that a Kling AI spinoff could unlock significant value for Kuaishou, citing the higher valuation multiples pure-play AI companies command over traditional internet firms.

The venue matters. Hong Kong closed the first half of 2026 as the world’s No. 2 IPO destination per the city’s H1 IPO rankings, raising HK$203.3 billion from 78 listings. Mainland Chinese tech and chip issuers drove the bulk of the volume, and a Kling AI float would extend that run.

Frequently Asked Questions

How much did Kling AI raise in its first external round?

Kling AI raised 19 billion yuan ($2.79 billion) in its first close, according to a Kuaishou regulatory filing released after Thursday’s market close. The South China Morning Post reports the round is targeting US$3 billion at an US$18 billion post-investment valuation as it expands.

What is Kling AI’s valuation after the funding?

The round values Kling AI at US$18 billion post-investment, per people familiar with the matter cited by SCMP. The pre-money valuation was US$15 billion, Bloomberg reported via CNBC.

Which investors are confirmed in the round?

Tencent is confirmed at $200 million, and 21 additional independent investors joined, per CNBC. The full roster has not been disclosed by Kuaishou.

Why is Tencent investing in a rival to its own Hunyuan model?

Tencent owns Hunyuan, a generative AI platform competing with Kling AI, yet put $200 million into the round. The bet hedges whichever Chinese AI video model emerges dominant, and the $200 million size keeps it a strategic stake rather than a balance-sheet threat.

When does Kling AI plan to list, and what will the IPO proceeds fund?

Kuaishou expects to start Kling AI’s Hong Kong listing process within 12 months, per a source close to the deal. Proceeds will fund computing and data centre expansion and talent acquisition, the source said.