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AI can do amazing things, but those things also come with huge costs. That combination is leading some companies to separately capitalize their AI business, insulating parents from constantly needing to pump new funds into their AI offspring. Short-video and livestreaming e-commerce platform Kuaishou Technology (1024.HK) is the latest to take that approach, as it pushes its Kling AI video generation platform into the capital markets. The business, which generates short videos using text or image prompts, is being restructured into an entity that can be independently financed and valued, and could even be separately listed.
Kuaishou unveiled that roadmap earlier this month, including a new financing plan for Kling. Under the plan, announced July 2, a group of initial investors will inject 13.8 billion yuan ($2.04 billion) into Beijing Keling Intelligent Technology Co. Ltd., Kling’s formal business entity, under a capital increase agreement. The same day, 15 more investors committed to injecting another 5.22 billion yuan into the company, bringing the total capital increase to 20.45 billion yuan. External investors will hold about 16.67% of the company after the capital infusion. Kuaishou's stake in Kling will fall from 100% to about 68.33% after adding in impact from a concurrent share incentive plan. That allows Kuaishou to continue consolidating Kling’s results into its own financial statements.