Until just hours before SpaceX revealed its option to acquire Cursor, the creator of AI-driven coding software, for $60 billion, Cursor was set to finalize a $2 billion funding round later this week, according to a source. This round would have placed the company’s valuation at $50 billion. SpaceX disclosed it might either buy the company later this year or pay $10 billion to Cursor for AI collaboration.
Cursor had been simultaneously discussing acquisition with SpaceX and concluding a private funding round involving investors such as Andreessen Horowitz, Thrive, Nvidia, and Battery Ventures, details previously reported by TechCrunch.
Startups often explore acquisitions while raising new funds. Although many private entities seek independence, Cursor’s $2 billion raise wouldn’t suffice for reaching break-even, likely necessitating significant future capital, the source noted.
SpaceX, having merged with xAI, is enhancing its AI capabilities to rival Anthropic and OpenAI. Acquiring Cursor strengthens Elon Musk’s company’s prospects in AI coding, a lucrative technology application.
Nonetheless, SpaceX will defer Cursor’s acquisition until after its IPO this summer to avoid adjusting its confidential financial filings before the listing, and to utilize its new, publicly traded stock for the $60 billion transaction.
The deal benefits both parties for various reasons.
Despite rapid revenue growth, Cursor faces stiff competition from Anthropic’s Claude Code and OpenAI’s Codex, which may hinder its ability to continue raising private funds for computing demands. Even if SpaceX doesn’t complete the acquisition, Cursor receives a $10 billion infusion from Musk’s company.
If SpaceX proceeds with the acquisition, it likely retains Cursor’s complete team. Unlike Google’s acquisition of Windsurf, which was a talent acquisition, SpaceX significantly lacks an AI team and doesn’t have a substantial AI business.
SpaceX accesses extensive computing resources at its data centers in Mississippi and Tennessee that it can offer to Cursor, potentially offsetting part of the $10 billion “collaboration” payment to the coding startup.
SpaceX aims for public recognition beyond a space and satellite entity. By eyeing Cursor’s potential acquisition, it positions itself as an AI company, hoping to achieve higher valuation multiples that Wall Street typically assigns to AI firms.