In a surprising turn of events, a 5% stake in AI coding startup Cursor, sold by FTX's bankruptcy estate for $200,000 in April 2023, would now be valued at approximately $3 billion following SpaceX's agreement to acquire the company at a staggering $60 billion valuation. This deal, announced by SpaceX, grants the company the option to purchase Cursor later this year for $60 billion or pay $10 billion if the full acquisition does not proceed. The move is seen as Elon Musk's strategic effort to bridge the gap with competitors OpenAI and Anthropic in the AI coding tools sector, an area where Musk's xAI is currently lagging behind. SpaceX has chosen to delay the immediate acquisition due to its planned initial public offering, which aims for a $2 trillion valuation, with the $10 billion serving as a breakup fee.
The investment in Cursor was initially made by Alameda Research, the trading firm founded by Sam Bankman-Fried, with a $200,000 investment in April 2022, which bought roughly 5% of the company at a $4 million valuation. However, following FTX's collapse and subsequent bankruptcy, the court-appointed estate sold the Cursor stake for the same $200,000, resulting in a significant missed recovery opportunity for creditors. This oversight has sparked controversy, particularly given Bankman-Fried's arguments that the estate's rapid liquidation of assets during the bankruptcy destroyed billions in value, and that customers could have received more than full compensation if the process had retained assets instead of selling them at the bottom of the crypto market.
The trajectory of Cursor's valuation, from its AI coding product launch in early 2023 to its current valuation, is one of the steepest in software startup history. While FTX customers have been reimbursed in full, plus interest, under the bankruptcy's distribution plan, they did not benefit from the substantial upside of the assets sold during the bankruptcy filing, including the $3 billion potential recovery from the Cursor stake.
This significant missed opportunity is likely to feature prominently in ongoing discussions about the case against Bankman-Fried and the handling of FTX's estate.