Chinese technology firm Kuaishou Technology announced Thursday that a coalition of investors — including major players Alibaba and Tencent — will pump more than 19 billion yuan, equivalent to approximately $2.80 billion, into its AI-powered video platform, Kling AI. The deal places a pre-money valuation of $15 billion on the service.
The massive capital raise reflects the enormous appetite investors have for China’s booming artificial intelligence industry, which has continued drawing billions in fresh funding. Technology companies in China raised a combined $3.1 billion through stock market listings in the first half of this year through mid-June — more than five times what was raised during the same stretch last year.
As part of the deal’s structure, Kling AI has a window of two months to bring on one additional investor, and the total fundraise is capped at 20.45 billion yuan.
Once the investment is complete, Kuaishou’s ownership share in Kling AI will drop from 100% to roughly 68%.
Along with Alibaba and Tencent, Baidu has also agreed to take a stake in Kling AI. The platform brought in 650 million yuan in revenue during the first quarter of this year — more than four times the amount it generated in the same period a year ago.
Analysts at Citi said the pre-money valuation was not unexpected, but called the lineup of investors “impressive,” noting that attention will now shift to an upcoming upgrade for the Kling AI platform.
Shares of Kuaishou surged as much as 6.9% on Friday following the announcement, though the stock gave back all of those gains and finished the trading day essentially flat.
Kuaishou had acknowledged in May that it was exploring a potential restructuring of Kling AI after media reports surfaced about a possible spin-off, though the company said at the time that those conversations were still in very early stages.
