Sources: Cursor in talks to raise $2B+ at $50B valuation as business progresses

AI coding startup Cursor is closing in on new funding in which the four-year-old company will raise at least $2 billion in new capital, according to four sources familiar with the matter. Returning investors Thrive and Andreessen Horowitz are expected to lead the financing at a $50 billion valuation, before the new capital injection, the people said.

Battery Ventures, a new investor, may also participate in the financing, according to two sources. Strategic investor Nvidia is also expected to write a check, one of the people said.

Although the round has been oversubscribed, the terms of the deal are not final and are subject to change.

The financing, when completed, will nearly double the previous Cursor $29.3 billion post-money valuationwhich was assigned to the company during its last collection six months ago.

Despite intense competition from other AI-coding offerings, such as Anthropic’s Claude Code and OpenAI’s revamped Codex, Cursor’s revenue continues to rise rapidly.

Cursor forecasts end 2026 with an annual revenue run rate of more than $6 billion, the two people said. This trajectory means the company expects to at least triple annual revenue over the next 10 months. In February, Cursor reached $2 billion in annual revenue, calculated by projecting the latest monthly sales for a year, Bloomberg reported.

Like many AI-coding startups that rely on third-party models, Cursor works on negative gross margin until now, explain it costs more to run the product than it pays to start it. Introducing a proprietary Composer model in November, along with the ability to call on less expensive models such as China’s Kimi, helped the company achieve lower gross margin profitability, the people said.

At a more granular level, the company achieved positive gross margins on its sales to large enterprises, but continued to lose money on individual developer accounts, according to one of the people.

By relying less on outside providers, Cursor tried to avoid being replaced by its own suppliers, especially Anthropic, whose Claude Code emerged as the startup’s main rival.

Cursor and Battery Ventures declined to comment. Thrive, a16z, and Nvidia did not respond to requests for comment.

Cursor, formerly known as Anysphere, was founded in 2022 by Michael Truell, Sualeh Asif, Arvid Lunnemark, and Aman Sanger while they were students at MIT.