General Atlantic in Talks to Lead $2B Round for China's Kling AI at $18B Valuation

A Rare US Bet on Chinese AI

Kuaishou Technology is in talks with New York-based growth equity firm General Atlantic to lead the first external funding round for Kling AI, its video-generation unit, according to a Bloomberg report on Monday. The round is targeting more than $2 billion at a post-money valuation of around $18 billion. If completed, it would mark a rare case of a major American investment firm backing a Chinese AI company at a time when Washington and Beijing remain locked in a tense standoff over advanced technology.

Discussions are still at an early stage, and there is no certainty a transaction will close on the proposed terms. The unit has also reportedly drawn initial interest from other Asia-focused investment firms.

Trimmed Expectations

Kling AI had initially sounded out investors about financing at a $20 billion target valuation, but trimmed those expectations to match cooler market appetite, according to people familiar with the matter. The Wall Street Journal reported back in May that Kuaishou was already in talks with potential investors, including Tencent Holdings, to raise $2 billion for the Kling unit ahead of a spinoff. At the time, Kling AI had reportedly reached a $500 million annualised revenue run rate.

What Kling AI Does

Kling AI generates videos and short films from text prompts, placing it squarely in one of the hottest and most competitive corners of artificial intelligence. The platform reportedly serves more than 60 million creators and 30,000 enterprise customers globally. It competes directly with tools from OpenAI and ByteDance, making the text-to-video space a genuine three-way contest across the US and China.

Path to a Hong Kong IPO

The fundraising is being positioned as a pre-IPO round. Internal plans call for Kling AI to submit listing application materials for a Hong Kong initial public offering in early 2027. At the targeted $18 billion pre-money valuation, the unit would be worth roughly two-thirds of parent company Kuaishou's entire market capitalisation, an extraordinary figure that underscores how much value investors now place on generative video.

The Bigger Picture

The potential investment highlights how some US firms continue to chase opportunities in China's AI sector despite geopolitical headwinds. With Xiaohongshu, Ant International and others also eyeing Hong Kong listings, Kling AI's move is part of a broader wave of Chinese tech companies racing toward public markets. Terms could still change before any agreement is finalised.