How SpaceX preempted a $2B fundraise with a $60B buyout offer

Source: TechCrunch

Until a few hours before SpaceX announced its deal, giving it the option to acquire Cursor—the maker of AI‑powered coding software—for $60 billion, the startup was on track to close a $2 billion funding round later this week, according to a person familiar with the matter. The 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 to collaborate on AI development.

Background

Cursor was running a parallel process, negotiating a potential acquisition by SpaceX while simultaneously finalizing a private funding round with investors that include Andreessen Horowitz, Thrive, Nvidia, and Battery Ventures. The details were first reported by TechCrunch last week.

Funding Round

It is not uncommon for startups to engage in acquisition discussions while raising new capital. Although many private companies prefer to remain independent, Cursor’s $2 billion raise would have fallen short of the capital needed to reach cash‑flow breakeven, likely forcing the company to raise additional funding later, the source said.

SpaceX Acquisition Offer

SpaceX, which recently merged with xAI, has been aiming to beef up its AI capabilities to better compete with leaders like Anthropic and OpenAI. Acquiring Cursor gives Elon Musk’s company a better chance of challenging rivals in AI coding, currently the most lucrative application of the technology.

SpaceX is delaying the potential acquisition of Cursor until after its IPO this summer. This delay is intended to avoid updating confidential financial filings before the listing and to make it easier to finance the $60 billion purchase using its new, publicly traded stock.

Strategic Implications

• Competitive pressure: Despite fast revenue growth, Cursor faces fierce competition from Anthropic’s Claude Code and OpenAI’s Codex. This pressure could make it harder for the startup to continue raising private capital to fund its massive computing needs.
• Capital injection: Even if the acquisition does not go through, Cursor will receive a $10 billion capital injection paid out over time from SpaceX.
• Team retention: If the deal closes, SpaceX is expected to keep the entire Cursor team intact, unlike Google’s acqui‑hire of Windsurf.
• Computing resources: SpaceX can offer Cursor access to its vast computing capacity at data centers in Mississippi and Tennessee, potentially in lieu of part of the $10 billion “collaboration” payment.
• Valuation positioning: By promising a potential acquisition, SpaceX positions itself as an AI company, aiming to attract the higher valuation multiples that Wall Street currently assigns to AI businesses rather than being seen solely as a space and satellite operator.