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

On July 3, 2026, Kuaishou officially announced the spin-off of its AI video division, Kling AI, into an independent company. The first tranche of the venture round has already closed at $2 billion; with additional investors participating, the total financing volume could reach approximately $3 billion.

How much did Kling AI raise and on what terms

The initial tranche of $2 billion has been fixed, but the doors for new round participants remain open. According to Kuaishou, expansion to $3 billion will dilute the parent company's stake to approximately 68% — Kuaishou will retain a controlling stake and the right to determine strategic decisions.

Key deal parameters:

• First closed tranche — $2 billion
• Projected round outcome with expansion — approximately $3 billion
• Kuaishou's stake in the spun-off company — approximately 68%
• Official status of Kling AI in the group — "fastest-growing business"
• Announcement date — July 3, 2026

Retaining a controlling stake is fundamental for Kuaishou: the company gives Kling AI financial and operational independence without losing influence over key technological and product decisions.

Why Kuaishou decided on a spin-off

Kuaishou is one of two dominant short-video platforms in China, a direct competitor to ByteDance with its Douyin and international TikTok. Kling AI evolved within the group as a platform for text-to-video and image-to-video generation; beginning in 2024, the product actively expanded to Western markets, competing with Runway, Sora, and Veo.

Spinning off into an independent company with external capital is a standard move for technology groups when an internal product grows to a scale requiring its own balance sheet and market valuation. Such a model simultaneously allows:

• Attracting investment at an independent valuation without selling the entire group outright
• Giving the team operational freedom and a separate profit center
• Building a potential track toward public offering
• Positioning Kling AI as a standalone AI story for global investors

Kling AI in the context of the AI video race

The AI video generation market is undergoing rapid consolidation: large rounds are attracting both Western and Asian players. Runway raised hundreds of millions of dollars in 2024–2025; Google is developing Veo, OpenAI is building a commercial ecosystem around Sora. Against this backdrop, Kling AI's $2–3 billion round is one of the largest in the segment.

It demonstrates that Chinese AI companies compete with Western ones not only technologically but also in access to venture capital.

What this means

Kling AI's spin-off with $2–3 billion in funding transforms it into one of the world's most capitalized AI video companies. For the market, this is a signal: video generation has definitively exited the status of a supporting function for video platforms and become an independent industry with its own capital stories and a race for global leadership.

Frequently asked questions

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

If the round expands to the projected $3 billion with new investor participation, Kuaishou's stake in the spun-off company will be approximately 68% — a controlling stake will remain with the parent entity.

What is the total financing volume for Kling AI?

The first closed tranche is $2 billion. Kuaishou allows for round expansion to approximately $3 billion with the participation of additional investors; the exact total sum will be known after the round closes.