- Kuaishou is planning to spin off its video-generation AI model, Kling AI, seeking to raise $2 billion at a $20 billion valuation, with Tencent in talks to participate in the investment.
- The spinoff and fundraising aim to secure capital to compete for computing power and talent amid fierce market competition.
Kuaishou is planning to spin off its video-generation AI model business, Kling AI, aiming to complete a massive $2 billion fundraising at a $20 billion valuation, according to a report by local media outlet LatePost on Monday.
Tech giant Tencent and other investors are in deep talks to participate in the funding round, though transaction details have yet to be finalized.
If the deal is completed, Kling will become the world's most valuable independent video-generation AI product, far exceeding its rival Runway, which is valued at around $5.3 billion.
This $20 billion valuation level is striking in the capital markets, as Kuaishou's entire market capitalization stood at less than $29 billion at the close of Hong Kong trading on Monday.
Kling's current financial performance has significantly exceeded the initial optimistic expectations of Kuaishou's management, with its annualized revenue now reaching the $500 million mark.
Compared to the period before the Lunar New Year, Kling's revenue has doubled, largely driven by strong demand from professional creators and its expansion into the mass market, the report said.
The spinoff and financing are strategic moves by Kuaishou to cope with fierce artificial intelligence (AI) competition, aiming to provide ample capital for the battle over computing power and talent.
ByteDance plans to increase its 2026 capital expenditure by about 25% to 200 billion yuan, a significant portion of which will be allocated to AI computing infrastructure, LatePost reported, citing the South China Morning Post.
The market competition for talent is intense. ByteDance has set up a "Doubao share" incentive plan for its Seed team, and Kling AI's core team has become a prime target for industry rivals and headhunters.
With competitors like ByteDance investing heavily in video-generation tools, Kuaishou urgently needs independent financing to secure key resources and retain top technical talent.
Independent operations will bring a clearer valuation framework for Kling, and Kuaishou has already established a new options incentive plan for the Kling team tied to its future listing valuation.
If Kling's future IPO valuation reaches $40 billion, the financial returns for the core team will increase substantially, LatePost reported, citing people familiar with the matter.
