Kuaishou Raises $3 Billion for Kling AI, With Tencent and Alibaba Among Investors

Kuaishou Technology has closed a funding round for its subsidiary Kling AI worth nearly $3 billion, valuing the generative video business at $18 billion. What has particularly caught the industry's attention is that the investor group includes Kuaishou's biggest rivals in China's tech market: Tencent, Alibaba and Baidu.

Kling AI is a text-to-video and image-to-video generation model launched by Kuaishou in June 2024. Within two years it has become one of the most serious contenders in the race for dominance in generative video, competing directly with America's Sora and Runway as well as ByteDance's Seedance in China.

An alliance against ByteDance

The involvement of Tencent, Alibaba and Baidu in funding a direct business rival is unusual, and according to market analysts stems from mounting competitive pressure from ByteDance. In June, that company released its Seedance 2.5 model, which natively supports 30-second video clips, and its predecessor was generating roughly 1 billion yuan in monthly revenue.

The market reads the joint involvement of the three giants as an informal alliance aimed at curbing ByteDance's growing lead in generative video. For Tencent and Alibaba, investing in Kling AI is a way to gain exposure to a fast-growing market without building their own model from scratch.

This shows how the market is shifting from valuations based on the AI narrative to valuations that reflect deal realities. - Huang Lichong, Huisheng International Capital

Financial pressure on Kuaishou

Spinning off Kling AI as a separate entity was also driven by the rising cost of maintaining the computing infrastructure needed to train and run video models. According to one Kuaishou employee quoted in trade media, the parent company was no longer able to finance the unit's continued growth on its own.

Kling AI's target valuation was originally set at $20 billion in April 2026, but was ultimately revised down to $18 billion. Despite the cut, Kling AI remains the most highly valued independent project in China's AI video generation segment.

What it means for the market

Kuaishou CEO Cheng Yixiao stressed that video generation technology is still far from mature, both technically and as a product, suggesting continued heavy spending on model development in the coming years. For European and Polish content creators, this points to growing price competition in the video tools market, as Chinese platforms invest aggressively in scaling their global distribution.

About 75 percent of Kling AI's revenue already comes from overseas markets, showing that the company treats expansion beyond China as a priority. The planned Hong Kong IPO within the next 12 months is meant to provide capital for further expansion of computing power, data centers and research teams.

Sources: Tech Funding News (techfundingnews.com), TechNode (technode.com), BigGo Finance (finance.biggo.com)