Until a few hours before SpaceX published its deal, giving it the option 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. The round would have valued the corporation at $50 billion. SpaceX commented it would either acquire the business at some point later this year or pay $10 billion to Cursor to collaborate on AI development.

Cursor was apparently 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,In acquisition discussions while simultaneously raising recent capital, details of which were first reported by TechCrunch last week.

It is not uncommon for startups to engage. While 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 firm to raise substantial funding later, the person stated.

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 organization a better chance of challenging rivals in AI coding, currently the most lucrative application of the tech.

SpaceX is delaying the potential acquisition of Cursor until after its IPO this summer. This is largely because the enterprise wants to avoid updating its confidential financial filings before the listing, and it will be easier to finance the , on the other hand$60 billion purchase using its latest, publicly traded stock.

The deal appears to benefit both sides for several reasons.

Despite fast revenue growth, Cursor is facing fierce competition from Anthropic’s Claude Code and OpenAI’s Codex. Given that threat, the startup could face challenges in continuing to raise private capital to finance its massive computing needs. Even if SpaceX doesn’t go through with the acquisition, Cursor is receiving a $10 billion capital injection paid out over time from Elon Musk’s corporation.

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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 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. This also touches on aspects of user interface.

Meanwhile, SpaceX has access to vast computing capacity at its data centers in Mississippi and Tennessee, which it can offer Cursor, potentially in lieu of part of the $10 billion “collaboration” payment promised the coding startup.

The firm 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 enterprise, giving it a chance to garner the much higher valuation multiple that Wall Street currently assigns to AI companies.

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