SpaceX moves ahead of $2B funding round with $60B share buyback offer

Until just hours before SpaceX announced its agreement involving Cursor — the AI-powered coding software company — Cursor was reportedly preparing to close a $2 billion funding round later this week, according to a person familiar with the matter. That round would have valued the startup at around $50 billion.

Instead, SpaceX said it would either acquire Cursor at a $60 billion valuation later this year or pay $10 billion to collaborate with the company on AI development.

Cursor was simultaneously running two parallel processes at the same time: negotiating a potential acquisition with SpaceX while also finalising a private funding round with investors including Andreessen Horowitz, Thrive Capital, Nvidia, and Battery Ventures, according to details first reported last week.

It is not unusual for startups to explore acquisition talks while also raising new capital. However, according to the person familiar with the situation, Cursor’s planned $2 billion raise would still have fallen short of the funding required to reach cash-flow breakeven, meaning the company would likely have needed additional financing in the future.

SpaceX, which recently merged with xAI, has been working to strengthen its AI capabilities to compete with leading firms such as Anthropic and OpenAI. Acquiring Cursor would give Elon Musk’s company a stronger position in the highly competitive AI coding sector, which is currently one of the most profitable applications of artificial intelligence.

However, the potential acquisition is expected to be finalised only after SpaceX’s planned IPO this summer. The delay is reportedly intended to avoid revising confidential financial filings ahead of the public listing and to make it easier to fund a $60 billion acquisition with publicly traded stock.

The arrangement appears to benefit both companies in multiple ways.

Despite strong revenue growth, Cursor is facing increasing competition from products such as Anthropic’s Claude Code and OpenAI’s Codex. Given this competitive pressure, the startup may find it more difficult to continue raising private capital to support its high computing costs. Even if SpaceX does not complete the acquisition, Cursor would still receive a $10 billion funding commitment from SpaceX, paid out over time.

In addition, if the acquisition proceeds, SpaceX is expected to retain Cursor’s full engineering team. Unlike Google’s acquisition of Windsurf, which focused mainly on hiring key individuals, SpaceX is not currently viewed as having a significant internal AI workforce or established AI division.

SpaceX also has access to large-scale computing infrastructure at its data centres in Mississippi and Tennessee, which could support Cursor’s operations and potentially offset part of the $10 billion collaboration payment.

The deal also carries strategic value for SpaceX beyond AI operations. By signalling a possible acquisition of Cursor, the company positions itself more clearly as an AI-focused business, rather than solely as a space and satellite operator. This positioning could help SpaceX attract a higher valuation multiple from public investors, particularly at a time when AI companies are receiving significantly higher market valuations on Wall Street.