Just hours before SpaceX revealed its agreement to potentially acquire Cursor—the developer of AI-powered coding software—for $60 billion, the startup was preparing to finalize a $2 billion funding round later that same week. This information comes from an individual with direct knowledge of the situation. That financing would have established a $50 billion valuation for the company.

SpaceX stated it will either purchase the company later this year or provide Cursor with $10 billion to partner on AI development. It is a typical scenario for startups to negotiate acquisition deals while also securing new investment capital. Although many private firms choose to stay independent, the source indicated that Cursor’s planned $2 billion raise would not have supplied enough capital to achieve cash-flow breakeven, almost certainly necessitating another significant funding round in the future.

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SpaceX, having recently combined with xAI, has been focused on strengthening its AI capabilities to more effectively compete with industry leaders such as Anthropic and OpenAI. Obtaining Cursor offers Elon Musk’s company a stronger opportunity to contend with rivals in the field of AI coding, which is currently the most profitable application of the technology.

However, SpaceX is postponing the potential acquisition of Cursor until after its initial public offering this summer. This delay is primarily because the company wishes to avoid revising its confidential financial documents prior to the listing. Furthermore, financing the $60 billion purchase will be simpler using its newly public stock.

The arrangement seems mutually advantageous for multiple reasons. Despite rapid revenue expansion, Cursor is encountering intense competition from Anthropic’s Claude Code and OpenAI’s Codex. Given this competitive pressure, the startup might struggle to continue raising the private capital required to fund its substantial computing demands.

Even if SpaceX does not complete the acquisition, Cursor will still receive a $10 billion capital infusion, disbursed over time, from Elon Musk’s firm. Should the acquisition proceed, the space conglomerate is expected to retain Cursor’s entire team. This contrasts with Google’s acquisition of Windsurf, which was structured as an acqui-hire of key personnel. SpaceX currently lacks a substantial AI workforce and is not widely recognized for having a significant AI operation.

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Concurrently, SpaceX possesses extensive computing capacity at its data centers in Mississippi and Tennessee, which it can offer to Cursor. This resource could potentially offset a portion of the $10 billion “collaboration” payment promised to the coding startup.

The company also aims for public investors to view it as more than solely a space and satellite enterprise. By committing to a potential acquisition of Cursor, SpaceX positions itself as an AI-focused company, providing an opportunity to attract the considerably higher valuation multiples that Wall Street currently awards to AI firms.