SpaceX is working with Cursor and has an option to buy the startup for $60B

Source: TechCrunch

Deal Overview

SpaceX announced a partnership with Cursor to develop a next‑generation “coding and knowledge work AI.” The agreement includes a provision that gives SpaceX an option to acquire the popular software development platform for $60 billion later this year.

Background

• xAI collaboration: Last week, it was reported that xAI would begin renting computing power from its data centers to Cursor, with the startup using tens of thousands of xAI chips to train its latest AI model.
• Talent movement: In the previous month, two of Cursor’s senior engineering leaders, Andrew Milich and Jason Ginsberg, left the company to join xAI, reporting directly to Elon Musk.
• Technical resources: SpaceX described the partnership as combining Cursor’s product and distribution to expert software engineers with SpaceX’s Colossus supercomputer, which the company claims has the equivalent compute power of a million Nvidia H100 chips.

Financial Details

• SpaceX may either pay Cursor $10 billion for its work or acquire the company for $60 billion at an undisclosed point later this year.
• A recent TechCrunch report noted that Cursor is targeting a $50 billion valuation in an upcoming private fundraising round.
• Valuation history:
  • $2.5 billion (January 2023)
  • $9 billion (May 2023)
  • $29.3 billion post‑money after a $2.3 billion Series D round (November 2023)

The brief statement did not specify whether the payment could be made in SpaceX stock.

Implications

• Strategic positioning: The partnership could strengthen both companies’ positions in the developer‑focused AI market, though neither Cursor nor xAI currently has proprietary models that match the leading offerings from Anthropic and OpenAI.
• Revenue streams: Cursor continues to sell access to Claude and GPT models while both firms develop their own coding tools, an arrangement the SpaceX partnership may eventually replace.
• Financial impact: Acquiring Cursor would represent a significant expense for SpaceX, which is already facing financial pressures after acquiring xAI and the social media platform X, and is planning extensive capital investment.

References

• xAI renting compute power from its data centers to Cursor
• Two senior Cursor engineers join xAI
• TechCrunch report on Cursor’s fundraising and valuation