Until hours before SpaceX announced its deal to acquire Cursor — the maker of artificial intelligence coding software — for $60 billion, Cursor was on track to close a $2 billion funding round later this week, according to a person familiar with the matter. The round would value the company at $50 billion. SpaceX said it would either buy the company sometime later this year or pay Cursor $10 billion to collaborate on artificial intelligence development.
Cursor has apparently been running a parallel process, negotiating a potential takeover by SpaceX while also completing a private funding round with investors including Andreessen Horowitz, Thrive, Nvidia and Battery Ventures, details of which were first reported by TechCrunch last week.
It’s not unusual for startups to be in acquisition discussions while simultaneously raising new capital. While many private companies prefer to remain independent, Cursor’s $2 billion raise would fall short of the capital needed to break even on cash flow, likely forcing the company to raise significant funding later, the person said.
SpaceX, which recently merged with xAI, aims to boost its AI capabilities to better compete with leaders like Anthropic and OpenAI. Acquiring Cursor gives Elon Musk’s company a better chance to challenge its rivals in AI coding, the technology’s most lucrative application right now.
However, SpaceX is delaying the potential acquisition of Cursor until its IPO this summer. That’s largely because the company wants to avoid updating its confidential financials before the listing, and it will be easier to finance the $60 billion purchase using its new, public stock.
The deal appears to benefit both sides for several reasons.
Despite rapid revenue growth, Cursor faces stiff competition from Anthropic’s Claude Code and OpenAI’s Codex. Given this threat, the startup could face challenges in continuing to raise private capital to fund its massive computing needs. Even if SpaceX doesn’t go ahead with the acquisition, Cursor gets a $10 billion capital injection paid over time by Elon Musk’s company.
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Additionally, if SpaceX goes ahead with the acquisition, the space giant will likely keep the entire Cursor team intact. Unlike Google’s purchase of Windsurf, which was structured as a key acquisition, SpaceX does not currently have a substantial AI workforce and is widely believed to have no significant AI business.
SpaceX, meanwhile, has access to massive computing capacity at its data centers in Mississippi and Tennessee, which it can offer to Cursor, potentially in exchange for the $10 billion “partnership” payment the coding startup promised.
The company would also like public investors to value it as more than just a space and satellite business. By promising to potentially acquire Cursor, SpaceX is positioning itself as an AI company, giving it the opportunity to garner the much higher valuation multiple that Wall Street currently assigns to AI companies.
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