Just hours before SpaceX unveiled its option to acquire Cursor — the developer of AI-powered coding software — for $60 billion, Cursor was reportedly on the verge of finalizing a $2 billion funding round this week, a deal that would have valued the company at $50 billion, according to an informed source. SpaceX's announcement outlined two potential paths: either a full acquisition of the company later this year or a $10 billion payment to Cursor for collaborative AI development.
It appears Cursor was simultaneously pursuing negotiations for a potential acquisition by SpaceX while also concluding a private funding round with investors including Andreessen Horowitz, Thrive, Nvidia, and Battery Ventures. Details of this parallel process were initially reported by TechCrunch last week.
Engaging in acquisition discussions while concurrently raising new capital is not uncommon for startups. While many private companies prefer to maintain independence, the source indicated that Cursor’s prospective $2 billion raise would have fallen short of the capital required to achieve cash-flow breakeven, likely necessitating further substantial funding in the future.
SpaceX, which recently integrated with xAI, has been focused on enhancing its AI capabilities to more effectively compete with industry leaders such as Anthropic and OpenAI. The potential acquisition of Cursor would significantly strengthen Elon Musk’s company’s position in challenging rivals within AI coding, currently recognized as the most lucrative application of the technology.
However, SpaceX intends to postpone the potential acquisition of Cursor until after its anticipated initial public offering (IPO) this summer. This delay is largely driven by the company's desire to avoid updating its confidential financial filings before the listing, and to facilitate the $60 billion purchase more easily using its new, publicly traded stock.
This prospective deal appears to offer mutual benefits for both parties.
Despite experiencing rapid revenue growth, Cursor faces intense competition from products like Anthropic’s Claude Code and OpenAI’s Codex. In light of this competitive threat, the startup could encounter difficulties in continuing to raise private capital to finance its considerable computing needs. Even if SpaceX does not proceed with the acquisition, Cursor is set to receive a $10 billion capital injection from Elon Musk’s company, disbursed over time.
Additionally, should SpaceX finalize the acquisition, the aerospace giant is expected to retain Cursor’s entire team. Unlike Google’s purchase of Windsurf, which was structured as an acqui-hire of key individuals, SpaceX currently lacks a significant AI workforce and is widely perceived as not having a substantial AI business.
Meanwhile, SpaceX possesses extensive computing capacity at its data centers in Mississippi and Tennessee, resources it could offer to Cursor, potentially in lieu of a portion of the $10 billion "collaboration" payment promised to the coding startup.
Lastly, the company aims for public investors to value it as more than solely a space and satellite business. By signaling its intent to potentially acquire Cursor, SpaceX strategically positions itself as a formidable AI company, thereby enhancing its opportunity to command the significantly higher valuation multiples that Wall Street currently assigns to artificial intelligence firms.
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