How SpaceX chose to raise $2B with a $60B acquisition opportunity

Until a few hours before SpaceX announced its contract, it gave them access to Cursor – an AI-powered software developer – for $60 billionCursor was on track to close a $2 billion deal later this week, according to a person familiar with the matter. The round would have valued the company at $50 billion. SpaceX has said it will either buy the company sometime this year or pay $10 billion to Cursor to help with AI development.

Apparently Cursor was running a similar strategy, discussing a possible acquisition with SpaceX while completing private equity financing with investors that included Andreessen Horowitz, Thrive, Nvidia, and Battery Ventures, many of which were first-time investors. by TechCrunch last week.

It’s not uncommon for startups to engage in acquisition discussions while raising new capital. While most private equity firms prefer to remain independent, Cursor’s $2 billion raise would have fallen short of the capital required to get it going, forcing the company to raise more money later, the person said.

SpaceX, which recently merged with xAI, has been looking to expand its AI capabilities to better compete with leaders such as Anthropic and OpenAI. Acquiring Cursor gives Elon Musk’s company a better chance against its competitors in AI coding, which is using more profitable technology.

However, SpaceX is delaying the Cursor’s availability until after the IPO this summer. This is mainly because the company wants to avoid renewing its secret financial records before, and it will be easier to get a $60 billion purchase using its new, publicly traded stock.

The deal appears to be beneficial to both parties for a number of reasons.

Despite rapid economic growth, Cursor faces fierce competition from Anthropic’s Claude Code and OpenAI’s Codex. Because of that risk, the startup may face difficulties in continuing to raise private equity to finance its massive computing needs. Although SpaceX does not go through with the acquisition, Cursor is receiving an injection of $10 billion paid over time from Elon Musk’s company.

Additionally, if SpaceX goes ahead with the acquisition, the space giant could make the entire Cursor fleet permanent. Unlike Google’s purchase of Windsurf, which was designed to be a key human resource, SpaceX currently lacks a strong AI workforce and is known for not having a large AI business.

Meanwhile, SpaceX has access to a large number of computers in its data centers in Mississippi and Tennessee, which can provide Cursor, possibly in exchange for a portion of the $10 billion “contract” promised at the start.

The company also wants public investors to see it as more than just a space and satellite business. By pledging to acquire Cursor, SpaceX is positioning itself as an AI company, giving them access to the large amounts of money Wall Street is offering to AI companies.