SpaceX Eyes $60B Cursor Acquisition as VC Buyouts Face Crisis

SpaceX announced a partnership with AI coding startup Cursor that includes an option to acquire the company for $60 billion later this year, as new data reveals software buyouts are delivering negative returns even when underlying businesses perform well.

The partnership combines Cursor’s software development platform with SpaceX’s Colossus supercomputer, which the company claims has computing power equivalent to one million NVIDIA H100 chips. According to TechCrunch, SpaceX will either pay Cursor $10 billion for development work or exercise the full acquisition option at an undisclosed point in 2026.

Cursor’s Meteoric Valuation Growth

Cursor’s potential $60 billion price tag represents extraordinary growth for the AI coding platform. The startup was valued at just $2.5 billion in January 2025, jumped to $9 billion by May, and reached a $29.3 billion post-money valuation after closing $2.3 billion in Series D funding in November.

TechCrunch reported last week that Cursor was targeting a $50 billion valuation in its next private funding round, making SpaceX’s $60 billion option a 20% premium over market expectations.

The deal follows strategic moves connecting Cursor to Elon Musk’s broader tech ecosystem. Last month, two senior Cursor engineering leaders — Andrew Milich and Jason Ginsberg — left to join xAI, where both report directly to Musk. Additionally, xAI began renting computing power to Cursor, with the coding startup using tens of thousands of xAI chips to train its latest AI models.

Software Buyout Crisis Emerges

The Cursor acquisition news comes as venture capital firm General Catalyst published data showing software buyouts are fundamentally broken. In its first quarterly investor letter, General Catalyst CEO Hemant Taneja argued that deals structured around terminal value rather than cash flow now deliver negative returns regardless of business performance.

The math is stark: A hypothetical deal entering at 25x EBITDA — typical for 2019-2021 buyouts — returns just 0.68x MOIC and a negative 7% IRR when multiples compress to current levels of 12.7x EBITDA, according to Forbes. This occurs even when the underlying business grows EBITDA by 50%.

General Catalyst manages $43 billion in assets under management and is betting the next era of private markets will look fundamentally different from the past cycle. The firm’s analysis suggests that business success no longer guarantees investment returns in the current market environment.

Public Market Reality Check

Public software multiples have compressed dramatically from the 25x EBITDA that characterized peak buyout years. Current trading multiples of roughly 12.7x EBITDA have destroyed equity value across growth-stage software investments, creating what Taneja calls a systematic failure of the investment model itself.

Enterprise AI Adoption Accelerates

Meanwhile, enterprise AI deployment is reaching unprecedented scale. Google Cloud reported 1,302 real-world generative AI use cases from leading organizations in an updated list published April 22, expanding from the original 101 cases documented two years ago.

The vast majority showcase agentic AI applications built with tools like Gemini Enterprise, Gemini CLI, and Google’s AI Hypercomputer infrastructure. According to Google’s blog, production AI and agentic systems are now deployed across virtually every organization attending Google’s Next ’26 conference in Las Vegas.

Microsoft is positioning what it calls “Frontier Transformation” — where AI becomes a repeatable, governed capability embedded into business processes. The company’s framework focuses on enriching employee experiences and reinventing customer engagement through AI and agentic solutions.

Indian Startup Funding Surge

In emerging markets, Indian instant house-help startup Snabbit is raising approximately $50 million at a $400 million valuation, led by Susquehanna Venture Capital. The round represents a significant jump from Snabbit’s $180 million valuation in October 2025, when it raised $30 million.

According to TechCrunch sources, the round may expand to $55 million or higher due to strong investor demand. Participants include Mirae Asset, FJ Labs, and existing investors Lightspeed Venture Partners and Bertelsmann India Investments.

Snabbit connects households with on-demand domestic help through a managed network of workers, completing over one million jobs in March 2026 alone. The startup competes with rivals like Pronto, which is finalizing funding at a $200 million valuation, and established player Urban Company.

Growing Market Demand

The funding surge reflects rising demand from India’s young, urban workforce accustomed to on-demand services. Snabbit founder and CEO Aayush Agarwal reported the company handled over 10,000 daily jobs and more than 300,000 total orders by October 2025.

What This Means

The convergence of massive AI acquisitions and venture capital market stress signals a fundamental shift in tech investing. SpaceX’s willingness to pay $60 billion for Cursor — potentially ahead of its own IPO — suggests AI coding platforms have become strategic assets worth premium valuations despite broader market compression.

General Catalyst’s analysis reveals that traditional software buyout models have broken down, with public market multiples insufficient to generate returns on growth-stage investments made during peak years. This creates pressure for alternative exit strategies and may accelerate strategic acquisitions by cash-rich technology companies.

The enterprise AI adoption data from Google and Microsoft indicates demand for AI solutions continues accelerating even as financial markets correct. This disconnect between operational AI deployment and investment returns may persist until valuation models adjust to new market realities.

FAQ

Why is SpaceX paying $60 billion for Cursor?
SpaceX sees Cursor as a strategic asset for its broader AI ambitions, combining the coding platform with its Colossus supercomputer infrastructure. The acquisition also positions SpaceX’s anticipated IPO with valuable AI assets that investors are seeking.

What’s causing software buyout returns to turn negative?
Public market software multiples have compressed from 25x EBITDA during 2019-2021 to roughly 12.7x today. Even when businesses perform well and grow EBITDA significantly, the multiple compression destroys equity value for investors who bought at peak valuations.

How fast is enterprise AI adoption growing?
Google reports 1,302 real-world AI use cases from leading organizations, up from 101 cases two years ago. Microsoft says production AI systems are now deployed across virtually every major organization, indicating rapid enterprise adoption despite investment market challenges.