Cursor in discussions to raise over $2B at a $50B valuation amid rapid enterprise growth

AI coding startup Cursor is close to securing a new round of funding that could bring in at least $2 billion in fresh capital, according to four people familiar with the discussions. Existing backers Thrive Capital and Andreessen Horowitz are expected to lead the round, which is being discussed at a $50 billion valuation before the new funds are added, the sources said.

A new investor, Battery Ventures, is also likely to take part, according to two of the sources. Strategic investor Nvidia is also expected to participate in the funding, one person added.

Although investor demand has already exceeded the amount being raised, the final structure of the deal has not yet been locked in and could still change.

If completed, the financing would represent a significant jump from Cursor’s previous valuation of $29.3 billion, set during its last funding round about six months ago.

Despite increasing competition in the AI coding space from products such as Claude Code by Anthropic and Codex from OpenAI, Cursor continues to see strong revenue growth.

The company is projecting that by the end of 2026, it will reach an annualised revenue run rate exceeding $6 billion, according to two sources. That estimate suggests Cursor expects to more than triple its current annualised revenue within roughly the next ten months. Earlier, in February, the company had already reached $2 billion in annualised revenue, calculated by extrapolating its most recent monthly performance over a full year, as previously reported by Bloomberg.

Like many startups in the AI coding sector that depend on third-party models, Cursor initially struggled with negative gross margins, meaning the cost of running its product exceeded the revenue it generated. However, that situation has recently improved. The rollout of its own proprietary Composer model last November, along with the ability to integrate lower-cost alternatives such as China’s Kimi model, has helped the company move into slightly positive gross margin territory, according to people familiar with its finances.

At a more detailed level, Cursor has already achieved positive gross margins when working with large enterprise customers. However, it is still operating at a loss on individual developer accounts, according to one source.

By reducing its reliance on external AI providers, Cursor is also attempting to avoid the risk of being overtaken by those same suppliers. This concern is particularly relevant for Anthropic, whose Claude Code product has become one of Cursor’s most direct competitors.

Cursor and Battery Ventures declined to comment on the funding discussions. Thrive Capital, Andreessen Horowitz, and Nvidia did not respond to requests for comment.

The company, previously known as Anysphere, was founded in 2022 by Michael Truell, Sualeh Asif, Arvid Lunnemark, and Aman Sanger while they were students at Massachusetts Institute of Technology.