Kling AI secures two billion dollars as Kuaishou separates its video AI division.

      Kling AI has secured two billion dollars from venture capitalists as Kuaishou prepares to spin off its AI video division in anticipation of an IPO. On Thursday, Kling AI, the video generation segment of the Chinese tech firm Kuaishou, announced an initial two billion dollars in venture capital investment. Additional investors may still join the funding round, potentially increasing the total to around three billion dollars and reducing Kuaishou’s ownership to about 68 percent, according to the company's statement. Bloomberg reported that the pre-money valuation was approximately 15 billion dollars, based on the filing.

      This funding round is Kling's first outside investment since Kuaishou began considering a spinoff earlier this year, and it comes at a lower valuation compared to the previously discussed range of 18 to 20 billion dollars in earlier negotiations. The South China Morning Post noted that Tencent is among the investors in this round, which gives the company a post-money valuation of about 18 billion dollars. Kuaishou had earlier mentioned that its board was reviewing a restructuring plan for Kling's assets, and reports from The Information indicate an IPO is being targeted for 2027.

      Kling specializes in generating videos and short films from text prompts, a sector that OpenAI stepped back from when it discontinued Sora in March after the tool struggled to retain users and incurred nearly one million dollars daily in computing costs. Kling faces competition from ByteDance's Seedance and the startup Shengshu in producing clips for professional filmmakers, marketers, and creative studios, and it aims to fill the gap left by Sora's exit.

      The business has been experiencing rapid growth. Kling's annual recurring revenue reached around 500 million dollars in March, an increase from 300 million dollars in January, driven by the launch of its third-generation model, as reported by Bloomberg. In the first quarter, revenue surpassed 650 million yuan (approximately 96 million dollars), more than triple the amount from the same period last year.

      This funding aligns with a broader trend of Chinese AI companies attracting significant investment as Beijing aims to keep its leading firms financed domestically. Whether Kling can maintain its growth trajectory to justify a listing with these valuations will depend on the stability of the professional video market it is targeting, or if AI-generated video follows a similar pattern of initial excitement followed by rapid user decline that affected Sora.