Kling AI raises $2 billion as Kuaishou spins off its video generation business

On July 3, 2026, Kuaishou officially announced that it is spinning off its AI video unit, Kling AI, into a standalone company. The first tranche of the venture round has already closed at $2 billion. If additional investors come in, total funding could reach about $3 billion.

How much Kling AI raised and on what terms

The initial $2 billion tranche is locked in, but the round remains open to new participants. According to Kuaishou, expanding the round to $3 billion would dilute the parent company's stake to roughly 68%. Kuaishou would still hold a controlling stake and the power to make strategic decisions.

Key deal terms:

• First closed tranche: $2 billion
• Projected round total if expanded: about $3 billion
• Kuaishou's stake in the spun-off company: about 68%
• Kling AI's official status within the group: "fastest-growing business"
• Announcement date: July 3, 2026

Keeping control matters to Kuaishou. The company gives Kling AI financial and operational independence without losing its say over key technology and product decisions.

Why Kuaishou went for a spin-off

Kuaishou is one of China's two dominant short-video platforms and a direct rival to ByteDance, which runs Douyin and, internationally, TikTok. Kling AI grew inside the group as a text-to-video and image-to-video platform. Starting in 2024, the product pushed aggressively into Western markets, competing with Runway, Sora, and Veo.

Spinning a unit off with outside capital is a standard move for tech groups once an internal product grows large enough to need its own balance sheet and market valuation. The model lets the parent do several things at once:

• Raise money at an independent valuation without selling the whole group
• Give the team operational freedom and a separate profit center
• Lay a potential path toward a public listing
• Pitch Kling AI to global investors as a standalone AI story

Kling AI in the AI video race

The AI video generation market is consolidating fast, with both Western and Asian players pulling in large rounds. Runway raised several hundred million dollars in 2024–2025; Google is developing Veo, and OpenAI is building a commercial ecosystem around Sora.

Against that backdrop, Kling AI's $2–3 billion round is one of the largest in the segment. It shows that Chinese AI companies compete with Western ones not only on technology but also on access to venture capital.

What it means

The spin-off, backed by $2–3 billion in funding, makes Kling AI one of the best-capitalized AI video companies in the world. For the market, it is a signal: video generation is no longer a side feature of video platforms. It has become an industry in its own right, with its own capital stories and a race for global leadership.

FAQ

What stake will Kuaishou keep in Kling AI after the round?

If the round expands to the projected $3 billion with new investors, Kuaishou will own about 68% of the spun-off company, and the parent will retain a controlling stake.

How much funding will Kling AI raise in total?

The first closed tranche is $2 billion. Kuaishou allows for the round to expand to roughly $3 billion with additional investors; the exact final amount will be known once the round closes.