Kling AI Raises $2.8B at $15B Valuation With Backing From Alibaba, Tencent and Baidu
Kuaishou's AI video unit Kling AI has secured over 19 billion yuan (~$2.8 billion) from Alibaba, Tencent, Baidu and state-backed funds, valuing it at $15 billion pre-money. The record raise—the largest ever for an AI video-generation business—dilutes Kuaishou's stake to about 68% ahead of a planned Hong Kong listing within 12 months.
Sarah covers AI, automotive technology, gaming, robotics, quantum computing, and genetics. Experienced technology journalist covering emerging technologies and market trends.
LONDON, Sunday, July 5, 2026 — Kuaishou Technology's AI video unit Kling AI raised more than 19 billion yuan, about $2.8 billion, from a consortium co-led by CPE, Guofang Venture Capital, BlueFive Capital, Tencent and CITIC Securities, with Alibaba Cloud and Baidu participating as strategic investors. The round values the business at $15 billion on a pre-money basis, according to Reuters. According to BlueFive Capital, it is the largest single financing ever recorded for an AI video-generation model company. The deal dilutes Kuaishou's stake to about 68% ahead of a planned Hong Kong listing. Figures independently verified via public financial disclosures and third-party market research.
Funding at a Glance
| Round | Date | Amount | Lead Investors | Valuation |
|---|---|---|---|---|
| Pre-IPO capital increase | July 2, 2026 | ~$2.8B (over 19B yuan) | Alibaba, Tencent, Baidu, CPE Yuanfeng, CITIC Securities, BlueFive Capital | $15B pre-money / ~$18B post-money |
Key Takeaways
- The financing is capped at 20.45 billion yuan, leaving room for another investor within two months.
- At least 38 investors committed capital, uniting China's usually rival tech ecosystems in one deal.
- Kuaishou's ownership falls from 100% to about 68.33%, retaining a controlling stake.
- Kling's Q1 2026 revenue cleared 650 million yuan, up more than 300% year-on-year, according to Reuters citing Kuaishou.
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Investor Context
The syndicate reads like a directory of China's most influential tech and state-backed funds. Tencent is investing about $200 million as part of the funding round. That is notable because Tencent owns Hunyuan, a generative video model that competes directly with Kling.
Co-leads include CPE Yuanfeng, Guofang Venture Capital, Abu Dhabi's BlueFive Capital, the Zhongguancun Science City Fund and CITIC Securities. Alibaba Cloud and Baidu joined as strategic investors, while state-linked institutions including the China Internet Investment Fund also took part. For all three tech giants, the logic points to commercial distribution access over model exclusivity.
Competitive Landscape
The raise lands as Western rivals retreat. OpenAI shut its Sora consumer app on April 26, 2026. Runway has pivoted toward world models for robotics and gaming. That leaves the commercial AI video field open to well-capitalized players like Kling and San Francisco's Higgsfield.
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| Company | Total Funding | Key Investors | Market Focus | Latest Round |
|---|---|---|---|---|
| Kling AI (Kuaishou) | ~$2.8B this round | Alibaba, Tencent, Baidu, CITIC | Text-to-video, film, ads | $15B pre-money, Jul 2026 |
| Higgsfield | ~$138M to date | Accel, Menlo, GFT Ventures | Commercial/enterprise video | ~$5B talks, Jun 2026 |
| Runway | $308M Series D (Apr 2025); Series E | General Atlantic | World models, filmmaking | $5.3B, Feb 2026 |
| Luma AI | $900M Series C | — | Dream Machine, creative agents | ~$4B, Nov 2025 |
| Pika Labs | ~$135M | Spark, Lightspeed, Greycroft | Consumer/social video | ~$470M, Jun 2024 |
Higgsfield is in talks to raise up to $500 million at a $5 billion pre-money valuation. Runway closed a $315 million Series E at a $5.3 billion valuation in February 2026.
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What Kling AI Does
Kling generates video from text prompts and images. It began as an internal project inside Kuaishou, the Beijing short-video platform that competes with ByteDance's Douyin. Its use cases span advertising, film and short-drama production, and gaming.
The parent app carries scale. Kuaishou's main platform reportedly counts 700 million monthly active users spending more than 130 minutes a day, according to CNBC. Kling says more than 60 million creators worldwide use its tools.
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Why It Matters
The round validates AI video as a standalone commercial category rather than a demo toy. Kling's Q1 revenue more than quadrupled from a year earlier to 650 million yuan, giving investors concrete numbers to price against. Its annualized run rate reached roughly $500 million in March, up from about $300 million in January after the Kling 3.0 launch, according to reporting citing Kuaishou disclosures.
The convergence of Alibaba, Tencent and Baidu in one deal signals a bet on distribution over rivalry. Analysts note the global AI video generator market was valued at roughly $788.5 million in 2025 and is projected to reach $3.4 billion by 2033, a 20.3% CAGR, according to a market-research forecast attributed to Grand View Research (figure not independently verified). What to watch: whether growth compounds once novelty fades.
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Forward Outlook
Kuaishou could start a Hong Kong listing process within twelve months, with future proceeds aimed at compute and data-center buildout. Citi analysts called the pre-money valuation broadly in line with expectations, describing the investor roster as "impressive." Attention now turns to Kling's next product upgrade.
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Disclosure
BUSINESS 2.0 has no commercial relationship with companies mentioned.
Sources include company disclosures, regulatory filings, analyst reports, and industry briefings.
Related Coverage
Analysis based on company announcements, investor disclosures, regulatory filings, Reuters, Bloomberg, Financial Times, CNBC, SEC documentation, and publicly available market data as of publication.
About the Author
Sarah Chen
AI & Automotive Technology Editor
Sarah covers AI, automotive technology, gaming, robotics, quantum computing, and genetics. Experienced technology journalist covering emerging technologies and market trends.
Frequently Asked Questions
How much did Kling AI raise and at what valuation?
Kuaishou said on July 2, 2026 that investors will inject over 19 billion yuan (about $2.8 billion) into Kling AI, valuing the unit at $15 billion on a pre-money basis and roughly $18 billion post-money. The round is capped at 20.45 billion yuan.
Who led the Kling AI funding round?
The round was co-led by CPE Yuanfeng, Guofang Venture Capital, Tencent, the Zhongguancun Science City Fund and CITIC Securities, with strategic participation from Alibaba Cloud and Baidu, plus state-linked funds including the China Internet Investment Fund. Roughly 36 investors took part.
Why is Tencent investing in a direct competitor?
Tencent is contributing about $200 million despite operating Hunyuan, its own generative video model. The calculus for Tencent, Alibaba and Baidu appears to prioritize commercial distribution access and Kling's demonstrated revenue traction over keeping a rival unfunded.
How is Kling AI performing financially?
Kling generated more than 650 million yuan (about $96 million) in Q1 2026 revenue, up over 300% year-on-year. Its annualized run rate reached roughly $500 million in March, up from $300 million in January following the Kling 3.0 launch.
When could Kling AI go public?
Kuaishou plans to start a Hong Kong listing process for Kling AI within roughly 12 months of the final payment date, with proceeds earmarked for compute power and data-center buildout. Investors reportedly have buyback protection if no public offering occurs by 2031.