Until hours before SpaceX announced its deal, offering to acquire Cursor — a 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. This round would have valued the company at $50 billion. SpaceX has said it will buy the company later this year or pay Cursor $10 billion to collaborate on AI development.
Cursor has apparently been going through a similar process, negotiating a possible acquisition of SpaceX while simultaneously finalizing a private funding round with investors including Andreessen Horowitz, Thrive, Nvidia, and Battery Ventures, the details of which were first reported by TechCrunch last week.
It’s not uncommon for startups to engage in acquisition discussions while simultaneously raising new capital. While most private equity firms prefer to remain private, Cursor’s $2 billion raise would not be enough to reach breakeven, potentially forcing the company to raise a larger round of funding later, the person said.
SpaceX, recently merged with xAI, aimed to improve its AI capabilities to better compete with leaders such as Anthropic and OpenAI. Acquiring Cursor gives Elon Musk’s company a better chance to challenge competitors in AI coding, currently the most profitable use of the technology.
However, SpaceX is delaying a potential acquisition of Cursor until after its IPO this summer. That’s because the company wants to avoid revising its confidential financial documents before listing, and it will be easier to fund the $60 billion acquisition using its new, publicly traded stock.
The deal appears to be beneficial to both parties for several reasons.
Despite rapid revenue growth, Cursor faces stiff competition from Anthropic’s Claude Code and OpenAI’s Codex. Given that threat, the startup may face challenges in continuing to raise private capital to fund its massive computing needs. Even if SpaceX doesn’t go through with the acquisition, Cursor is getting a $10 billion cash injection paid over time from Elon Musk’s company.
Techcrunch event
San Francisco, CA
|
October 13-15, 2026
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, which was framed as an acqui-hire of key people, SpaceX currently has no significant AI workforce and is widely seen as not having a significant AI business.
Meanwhile, SpaceX has access to massive computing capacity at its data centers in Mississippi and Tennessee, which it could offer Cursor, possibly in exchange for part of the $10 billion “cooperation” payment it promised to start coding.
The company would also like public investors to value it as more than just a space and satellite business. By promising to acquire Cursor, SpaceX is positioning itself as an AI company, giving us an opportunity to get the highest double the valuation that Wall Street is currently offering to AI companies.
If you shop through links in our articles, we may earn a small commission. This does not affect our editorial independence.
