Alibaba, Tencent join US$2 billion funding for Kuaishou’s Kling AI

[HONG KONG] Alibaba Group Holding joined a US$2 billion financing round for Kuaishou Technology’s Kling AI, valuing the creator of one of China’s most popular generative video services at about US$15 billion before the investment.

Alibaba joined a clutch of investors in Kling that included Baidu and Tencent Holdings – a previous backer of Kuaishou. The company may potentially raise as much as about US$3 billion as more investors may take part in future, it said in a statement. The financing would dilute the parent’s stake in the AI startup to about 68 per cent, it added.

Kuaishou’s stock jumped as much as 6.9 per cent in Hong Kong. The financing marks a milestone for Kuaishou, which began as a repository if TikTok-like videos before pivoting towards generative AI after the debut of ChatGPT.

Kling is now part of a wave of Chinese AI video services seeking to pull in revenue from global customers, moving to fill a void after OpenAI shuttered Sora. Kuaishou’s unit competes with ByteDance’s Seedance and startups like Shengshu in delivering high-quality clips for filmmakers, advertisers and creative studios.

Kuaishou had targeted a post-investment valuation of as much as US$20 billion before scaling back those expectations earlier this year, Bloomberg News has reported. If it succeeds in hitting US$3 billion of financing, that would confer a post-money valuation of US$18 billion on the startup, which is expected to get spun off and floated on public markets eventually.

The division’s annual recurring revenue – an indication of forward-looking sales – grew to about US$500 million in March from US$300 million in January, driven by the launch of Kling 3.0. It generated revenue of over 650 million yuan (US$96.2 million) in the first quarter, up more than 300 per cent from a year ago. BLOOMBERG