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

Until a fewer hours earlier SpaceX announced its deal, giving it the enactment to get Cursor — the shaper of AI-powered coding bundle — for $60 billion, Cursor was connected way to adjacent a $2 cardinal backing circular aboriginal this week, according to a idiosyncratic acquainted with the matter. The circular would person valued the institution astatine $50 billion. SpaceX said it would either bargain the institution astatine immoderate constituent aboriginal this twelvemonth oregon wage $10 cardinal to Cursor to collaborate connected AI development.

Cursor was seemingly moving a parallel process, negotiating a imaginable acquisition by SpaceX portion simultaneously finalizing a backstage backing circular with investors that see Andreessen Horowitz, Thrive, Nvidia, and Battery Ventures, details of which were archetypal reported by TechCrunch past week.

It is not uncommon for startups to prosecute successful acquisition discussions portion simultaneously raising caller capital. While galore backstage companies similar to stay independent, Cursor’s $2 cardinal rise would person fallen abbreviated of the superior needed to scope cash-flow breakeven, apt forcing the institution to rise important backing later, the idiosyncratic said.

SpaceX, which precocious merged with xAI, has been aiming to beef up its AI capabilities to amended vie with leaders similar Anthropic and OpenAI. Acquiring Cursor gives Elon Musk’s institution a amended accidental of challenging rivals successful AI coding, presently the astir lucrative exertion of the technology.

However, SpaceX is delaying the imaginable acquisition of Cursor until aft its IPO this summer. This is mostly due to the fact that the institution wants to debar updating its confidential fiscal filings earlier the listing, and it volition beryllium easier to concern the $60 cardinal acquisition utilizing its new, publically traded stock.

The woody appears to payment some sides for respective reasons.

Despite accelerated gross growth, Cursor is facing fierce contention from Anthropic’s Claude Code and OpenAI’s Codex. Given that threat, the startup could look challenges successful continuing to rise backstage superior to concern its monolithic computing needs. Even if SpaceX doesn’t spell done with the acquisition, Cursor is receiving a $10 cardinal superior injection paid retired implicit clip from Elon Musk’s company.

Additionally, if SpaceX goes done with the acquisition, the abstraction elephantine volition apt support the full Cursor squad intact. Unlike Google’s acquisition of Windsurf, which was structured arsenic an acqui-hire of cardinal individuals, SpaceX presently lacks a meaningful AI workforce and is wide seen arsenic not having a important AI business.

Meanwhile, SpaceX has entree to immense computing capableness astatine its information centers successful Mississippi and Tennessee, which it tin connection Cursor, perchance successful lieu of portion of the $10 cardinal “collaboration” outgo promised the coding startup.

The institution would besides similar nationalist investors to worth it arsenic much than conscionable a abstraction and outer business. By promising to perchance get Cursor, SpaceX positions itself arsenic an AI company, giving it a accidental to garner the overmuch higher valuation aggregate that Wall Street presently assigns to AI companies.