Kling nears $3B funding round at $18B valuation with Tencent

Kuaishou's AI video subsidiary is closing a $3 billion funding round that values the company at up to $18 billion, with Tencent joining as an investor.

Kling, the artificial intelligence unit of Kuaishou Technology (01024.HK), is close to completing a $3 billion funding round that values the company at as much as $18 billion, according to people familiar with the matter — below the $20 billion target the company set in April. Tencent Holdings (00700.HK) participated in the round, the people said, marking one of the largest AI subsidiary fundraises in China this year.

"The participation of Tencent validates Kling's positioning in the competitive AI video generation market," said a person close to the deal who asked not to be named because the terms are private. "The valuation adjustment reflects a more measured fundraising environment compared to early 2026."

The $18 billion post-money valuation represents a roughly 10% discount from the initial $20 billion target, though it still ranks among the highest for Chinese AI startups. Kuaishou, which owns approximately 100% of Kling before the round, will see its stake diluted as new investors including Tencent come in. The deal underscores the intense competition in China's AI sector, where companies like ByteDance, Baidu and Alibaba are all investing heavily in generative AI capabilities.

Kuaishou shares rose 4.62% to HKD43.52 on the news, while Tencent gained 3.07% to HKD443, reflecting investor enthusiasm for the AI tie-up. The funding comes as Chinese tech giants race to capture market share in AI video generation, a segment that requires massive computing infrastructure and expensive model training runs. Kling's technology competes directly with offerings from ByteDance and Alibaba's Ant Group, which has been aggressively pursuing humanoid robotics and AI deals.

For Tencent, the investment provides exposure to Kuaishou's AI capabilities without a full acquisition, mirroring its strategy of making minority bets across the Chinese AI ecosystem. The Shenzhen-based gaming and social media giant has been expanding its AI footprint through both internal development and strategic investments.

The deal is expected to close in the coming weeks, subject to customary regulatory approvals. Kuaishou and Tencent declined to comment on the fundraising terms.

This article is for informational purposes only and does not constitute investment advice.