AI coding startup Cursor is nearing a massive funding round that would raise at least $2 billion at a $50 billion pre-money valuation in 2026, according to four sources familiar with the matter. The deal, if completed, would nearly double the company’s $29.3 billion valuation from just six months ago.
Returning investors Andreessen Horowitz and Thrive are expected to lead the financing, with Battery Ventures joining as a new investor and strategic investor Nvidia also expected to participate, sources said. The round is already oversubscribed, though terms are not final and may still change.
The four-year-old company’s revenue growth is driving investor enthusiasm. Cursor forecasts ending 2026 with an annualized revenue run rate exceeding $6 billion, implying it expects to at least triple its annualized revenue over the next 10 months. In February, the startup reached $2 billion in annualized revenue, Bloomberg reported.
The financing comes despite fierce competition from rivals including Anthropic’s Claude Code and OpenAI’s revamped Codex. Like many AI-coding startups reliant on third-party models, Cursor operated at negative gross margins until recently, meaning it cost more to run the product than it could charge for it.
The introduction of a proprietary Composer model last November, along with the ability to use less expensive models like China’s Kimi, has helped Cursor achieve slight gross margin profitability overall, sources said. The company has reached positive margins on sales to large enterprises but continues to lose money on individual developer accounts.
By developing its own models, Cursor is attempting to avoid being replaced by its own suppliers, particularly Anthropic, whose Claude Code has emerged as the startup’s main competitor.
Cursor, previously known as Anysphere, was co-founded in 2022 by Michael Truell, Sualeh Asif, Arvid Lunnemark, and Aman Sanger while they were students at MIT.
Source: TechCrunch