SpaceX is betting on Cursor, an artificial intelligence startup that produces software for coding.
The aerospace company led by Elon Musk announced it has secured an option to acquire the startup Cursor for $60 billion by the end of the year, or to pay $10 billion for the new partnership, thus strengthening its presence in the lucrative market of AI developer tools.
The deal highlights SpaceX CEO Elon Musk’s commitment to transforming his company into a powerhouse in AI ahead of its potential IPO, which could happen as early as June, notes Axios. The aerospace company is aiming for a valuation of nearly $1.75 trillion and a fundraising round of $75 billion, which could go down as the largest IPO ever.
Moreover, for over a year Musk has also pushed SpaceX toward AI-related initiatives, including AI data centers orbiting Earth and an AI chip factory. In February, SpaceX acquired xAI, creating a company self-valued at $1.25 trillion.
All the details.
WHAT CURSOR DOES
Founded in 2022 and based in San Francisco, Cursor is a startup that sells AI models for programming tasks, founded by Michael Truell, Sualeh Asif, Aman Sanger, and Arvid Lunnemark, who met at MIT, reports the New York Times.
According to the Financial Times, it is one of the fastest-growing startups in Silicon Valley since its launch in 2022.
Together with OpenAI and Anthropic, Cursor is one of several Silicon Valley startups that have attracted a large number of developers by using artificial intelligence to automate programming, a sector where AI companies have achieved their first commercial successes, notes Reuters.
THE NUMBERS
The startup quickly gained success, with tech companies adopting its tools. Cursor has established itself as a leader in its sector, reaching $100 million in “annual recurring revenue,” meaning monthly revenue extrapolated over a full year, in less than two years.
Cursor’s annual revenue surpassed $2 billion earlier this year, thanks to the strength of its tools designed to boost software engineers’ productivity, notes the Ft.
THE VALUATION
Cursor has raised over $3 billion from major investment firms including Thrive Capital, Andreessen Horowitz, and Accel, and has recently been in talks to secure additional funding. In November, the California company reached a valuation of $29 billion.
According to Cnbc, the AI startup is negotiating to raise about $2 billion in a new funding round, which would bring the company’s valuation to over $50 billion. The round would be co-led by Andreessen Horowitz, with expected participation from Nvidia and Thrive Capital, all already investors in the startup.
THE DEAL WITH SPACEX
Michael Truell, co-founder and CEO of Cursor, said the deal with SpaceX represents “a significant step in our journey to build the best environment for programming with AI.”
In a blog post published Tuesday, the startup stated that the lack of access to the computing power needed to train its AI models had “limited” its growth. The deal with SpaceX will give it access to xAI’s infrastructure, which includes a supercomputer capable of training AI models. This will help Cursor “dramatically increase the intelligence of our models,” the startup said.
Additionally, as Reuters recalls, last March, two product engineering leads at Cursor announced they had joined SpaceX to contribute to the company’s lunar projects and to xAI, Musk’s AI startup that produces the chatbot Grok, part of SpaceX since February. Musk welcomed engineers Andrew Milich and Jason Ginsberg, stating: “Orbital space centers and mass propulsion on the Moon will be incredible.”
ELON MUSK’S STRATEGY
“The combination of Cursor’s leading product and its distribution network among experienced software engineers with the Colossus training supercomputer, equivalent to a million H100s, will allow us to build the most useful models in the world,” SpaceX said in a post on X Tuesday.
Colossus is xAI’s supercomputer cluster in Memphis, developed in 122 days, which the company presented as the largest in the world. It also provides Cursor with greater computing capacity to develop AI models.
With this deal, Elon Musk hopes to catch up with competitors in the field of artificial intelligence, just months before SpaceX’s stock market listing.
