AI coding startup Cursor is reportedly nearing a new funding round that is expected to raise at least $2 billion in fresh capital. Sources familiar with the matter indicate that returning investors Thrive and Andreessen Horowitz are slated to lead this significant financing, which would value the four-year-old company at $50 billion prior to the new capital injection. Additionally, Battery Ventures is expected to participate as a new investor, with strategic investor Nvidia also anticipated to contribute. Although the round is currently oversubscribed, the final deal terms are not yet conclusive and remain subject to potential changes. If successfully completed, this financing would almost double Cursor’s previous post-money valuation of $29.3 billion, which was assigned just six months ago during its last fundraising.

Despite facing intense competition from other prominent AI-coding offerings, such as Anthropic’s Claude Code and OpenAI’s revamped Codex, Cursor has demonstrated robust and rapid revenue growth. The company projects an annualized revenue run rate exceeding $6 billion by the end of 2026, which implies an expectation to at least triple its annualized revenue within a ten-month period. Notably, in February, Cursor had already achieved $2 billion in annualized revenue, a figure calculated by projecting its most recent monthly sales over a full year.

Initially, like many AI-coding startups that rely on third-party models, Cursor operated at negative gross margins, meaning the cost to run its product was higher than the revenue generated. However, this financial dynamic shifted with the introduction of its proprietary Composer model last November. Coupled with the strategic ability to utilize less expensive models like China’s Kimi, these developments have been instrumental in helping the company attain slight gross margin profitability.

On a more detailed level, Cursor has successfully reached positive gross margins on its sales to large enterprise clients, although it continues to experience losses on individual developer accounts. By increasingly relying on its own models and reducing dependence on external providers, Cursor is actively working to mitigate the risk of being overshadowed or replaced by its own suppliers, especially given that Anthropic, a key supplier, has also emerged as the startup’s primary rival with its Claude Code offering.

Cursor, which was previously known as Anysphere, was co-founded in 2022 by Michael Truell, Sualeh Asif, Arvid Lunnemark, and Aman Sanger while they were students at the Massachusetts Institute of Technology (MIT).