In a notable turn of events, the 5% stake in AI coding startup Cursor, which was sold by FTX's bankruptcy estate for $200,000 in April 2023, would now be valued at approximately $3 billion following SpaceX's acquisition agreement at a $60 billion valuation. This deal marks a significant move by Elon Musk to bridge the gap with competitors in the AI coding tools space.
The agreement allows SpaceX to either acquire Cursor for $60 billion later this year or pay $10 billion if the full acquisition does not proceed, with the latter serving as a breakup fee due to SpaceX's planned initial public offering targeting a $2 trillion valuation. The investment in Cursor was initially made by Alameda Research, founded by Sam Bankman-Fried, in April 2022, with a $200,000 investment for roughly 5% of the company at a $4 million valuation. After 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. This event has sparked debate, particularly from Bankman-Fried, who argues that the estate's liquidation of assets too quickly destroyed billions in value, and that customers could have received more if the assets had been held.
The trajectory of Cursor's valuation from its AI coding product launch in 2023 to its current valuation is one of the steepest in software startup history, representing a 15,000x return. While FTX customers have been repaid in full under the bankruptcy distribution plan, they did not receive the upside from the assets' subsequent increase in value, including the $3 billion forgone recovery from the Cursor stake.