Andreessen, Thrive Poised for Windfall From SpaceX's Cursor Bid

Andreessen Horowitz and Thrive Capital are poised for a multibillion-dollar windfall from their early investments in Cursor if Elon Musk's SpaceX moves forward with an agreement to acquire the artificial intelligence coding startup for $60 billion.

Andreessen Horowitz is the largest outside shareholder in the startup, with a roughly 10% stake that would be worth about $6 billion at the estimated transaction price, according people familiar with the matter. The venture firm backed Cursor multiple times, including leading the startup's Series A funding round at a $400 million valuation and co-leading a follow-up financing at a $2.5 billion valuation.

Thrive is the second largest outside shareholder, with a roughly 7% stake in the company, said one of the people, who spoke on condition of anonymity as the information is not public. That stake would be worth about $4.2 billion, adding to its potential gains from SpaceX as an early investor in the rocket maker.

Andreessen, Thrive and Cursor declined to comment.

SpaceX said Tuesday that it has an agreement giving it the right to buy Cursor for $60 billion later this year or to pay $10 billion for the companies' work together, part of the firm's efforts to catch up with rivals in AI coding tools. SpaceX isn't acquiring Cursor immediately because of the rocket company's imminent initial public offering, Bloomberg News has reported.

Cursor, which launched an AI assistant in 2023, emerged as one of the fastest-growing startups of all time and a central player in tech's "vibe coding era." The deal, if completed, would offer a significant return for Cursor's backers at a time when many startups are waiting longer to go public, depriving venture firms of more liquidity.

"This is a literal rocket ship being bought by an actual, literal rocket ship," said Michael Fertik, a very early investor in Cursor when the company still went by the name Anysphere. "Together, they're going to have the possibility of seeking the brass ring of ruling the Earth on software," said Fertik, who invests in early-stage startups.

Cursor's valuation had soared over the past two years, jumping from $9.9 billion last June to $29.3 billion in November. Cursor had been in talks with investors, including Andreessen and Thrive, to raise about $2 billion in a funding round with a valuation of more than $50 billion, not including the investment, Bloomberg reported last week. Those deal talks have been stopped as a result of xAI's new deal.

Other investors stand to benefit from Cursor's deal with SpaceX. Accel owns roughly 2.5% of the company, worth about $1.5 billion, the person said. Benchmark owns less than 1% of the startup, or about a $300 million stake, the people said. Despite it being a relatively minor investment for Benchmark, the deal could return a significant portion of Benchmark's funds, which usually hover around $400 million.

Accel and Benchmark declined to comment.

No firms stands to gain as much from the potential Cursor deal as Andreessen and Thrive, both in terms of the returns and the reputational benefit. When the firms invested, many startups were competing to dethrone AI code-generation pioneer GitHub Copilot. Andreessen's team, in particular, was using Cursor for hobbyist coding projects.

As part of their investments, Andreessen general partner Martin Casado and Thrive general partner Miles Grimshaw joined Cursor's board of directors. Miles Clements, an Accel partner who helps lead the firm's growth fund, is also on the board.

In a previous interview about Andreessen's AI infrastructure investments, Casado told Bloomberg News the goal is to be early. "We invest much before these crazy numbers typically," Casado said. "Even when you see these big headline numbers or whatever, often we're in earlier."