HomeSpaceX preempts $2B fundraise with $60B buyout offer
Just hours before SpaceX announced its deal to acquire Cursor — the maker of AI-powered 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. That round would have valued the company at $50 billion. SpaceX said it would either buy the company later this year or pay $10 billion to Cursor for a collaboration on AI development.
Cursor was reportedly running a parallel process: negotiating a potential acquisition by SpaceX while simultaneously finalizing a private funding round with investors including Andreessen Horowitz, Thrive, Nvidia, and Battery Ventures. Those details were first reported by TechCrunch last week.
It’s not unusual for startups to engage in acquisition talks while also raising new capital. But while many private companies prefer to stay independent, Cursor’s $2 billion raise would have fallen short of the capital needed to reach cash-flow breakeven, likely forcing the company to seek substantial additional funding later, the person said.
SpaceX, which recently merged with xAI, has been working to strengthen its AI capabilities to better compete with leaders like Anthropic and OpenAI. Acquiring Cursor gives Elon Musk’s company a stronger shot at challenging rivals in AI coding, currently the most lucrative application of the technology.
However, SpaceX is delaying the potential acquisition of Cursor until after its IPO this summer. This is largely to avoid updating its confidential financial filings before the listing, and it will be easier to finance the $60 billion purchase using its new, publicly traded stock.
The deal appears to benefit both sides for several reasons.
Despite fast revenue growth, Cursor faces fierce competition from Anthropic’s Claude Code and OpenAI’s Codex. Given that threat, the startup could struggle to continue raising private capital to fund its massive computing needs. Even if SpaceX doesn’t go through with the acquisition, Cursor will receive a $10 billion capital injection paid out over time from Elon Musk’s company.
Additionally, if SpaceX goes through with the acquisition, the space giant will likely keep the entire Cursor team intact. Unlike Google’s purchase of Windsurf — structured as an acqui-hire of key individuals — SpaceX currently lacks a meaningful AI workforce and is widely seen as not having a significant AI business.
Meanwhile, SpaceX has access to vast computing capacity at its data centers in Mississippi and Tennessee, which it can offer to Cursor, potentially in lieu of part of the $10 billion “collaboration” payment promised to the coding startup.
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 positions itself as an AI company, giving it a chance to capture the much higher valuation multiple that Wall Street currently assigns to AI companies.
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Just hours before SpaceX announced its deal to acquire Cursor — the maker of AI-powered 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. That round would have valued the company at $50 billion. SpaceX said it would either buy the company later this year or pay $10 billion to Cursor for a collaboration on AI development.
Cursor was reportedly running a parallel process: negotiating a potential acquisition by SpaceX while simultaneously finalizing a private funding round with investors including Andreessen Horowitz, Thrive, Nvidia, and Battery Ventures. Those details were first reported by TechCrunch last week.
It’s not unusual for startups to engage in acquisition talks while also raising new capital. But while many private companies prefer to stay independent, Cursor’s $2 billion raise would have fallen short of the capital needed to reach cash-flow breakeven, likely forcing the company to seek substantial additional funding later, the person said.
SpaceX, which recently merged with xAI, has been working to strengthen its AI capabilities to better compete with leaders like Anthropic and OpenAI. Acquiring Cursor gives Elon Musk’s company a stronger shot at challenging rivals in AI coding, currently the most lucrative application of the technology.
However, SpaceX is delaying the potential acquisition of Cursor until after its IPO this summer. This is largely to avoid updating its confidential financial filings before the listing, and it will be easier to finance the $60 billion purchase using its new, publicly traded stock.
The deal appears to benefit both sides for several reasons.
Despite fast revenue growth, Cursor faces fierce competition from Anthropic’s Claude Code and OpenAI’s Codex. Given that threat, the startup could struggle to continue raising private capital to fund its massive computing needs. Even if SpaceX doesn’t go through with the acquisition, Cursor will receive a $10 billion capital injection paid out over time from Elon Musk’s company.
Additionally, if SpaceX goes through with the acquisition, the space giant will likely keep the entire Cursor team intact. Unlike Google’s purchase of Windsurf — structured as an acqui-hire of key individuals — SpaceX currently lacks a meaningful AI workforce and is widely seen as not having a significant AI business.
Meanwhile, SpaceX has access to vast computing capacity at its data centers in Mississippi and Tennessee, which it can offer to Cursor, potentially in lieu of part of the $10 billion “collaboration” payment promised to the coding startup.
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 positions itself as an AI company, giving it a chance to capture the much higher valuation multiple that Wall Street currently assigns to AI companies.
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