FTX’s Missed Opportunity: The $200K Cursor Stake Now Valued at $500 Million

In a stark reminder of the volatile nature of crypto investments, FTX’s liquidators sold a $200,000 stake in Cursor—an AI code editor—for the exact amount it was originally purchased. Today, that stake is valued at an estimated $500 million, highlighting a significant missed opportunity for FTX creditors.

• FTX sold Cursor stake for $200,000, now worth $500 million
• Cursor raised $900 million at a $9 billion valuation
• Investors include Thrive Capital, a16z, and Accel

Back in 2022, Alameda Research—FTX’s sister trading firm—made a modest $200,000 investment in Cursor’s seed round. Fast forward to the present, and that stake could have been worth a staggering $500 million. Unfortunately for FTX creditors, the platform’s liquidators opted to sell it off at cost, missing out on a potential half-billion dollar recovery.

Cursor, developed by Anysphere Inc., has experienced a meteoric rise since that initial investment. The company recently raised a whopping $900 million, valuing it at $9 billion. This funding round was led by Thrive Capital, with notable venture capital firms like Andreessen Horowitz (a16z) and Accel also participating. Cursor’s annual recurring revenue (ARR, the amount of revenue a company can reliably expect every year) has reportedly surpassed $200 million, demonstrating its rapid growth and the increasing demand for AI-driven coding solutions.

At its core, Cursor is an AI code editor that uses sophisticated models from industry giants like OpenAI and Google, alongside its proprietary Cursor-Fast model. These AI technologies help developers code faster and more efficiently, acting like smart assistants in the coding process. The platform’s unique approach has even been dubbed “vibe coding” by AI researcher Andrej Karpathy, emphasizing its transformative impact on the coding experience.

OpenAI, a key player in the AI space, attempted to acquire Anysphere but was unsuccessful. Not deterred, OpenAI is now eyeing another acquisition in the AI coding tools market, considering a move for Windsurf (Exafunction Inc.) for up to $3 billion. This aggressive acquisition strategy underscores the competitive nature of the AI coding tools market, where companies are racing to dominate and enhance developer productivity.

FTX’s decision to sell the Cursor stake at cost is baffling. Did the liquidators not do their homework, or was this a rushed decision amidst the chaotic aftermath of the exchange’s collapse? It’s a stark reminder that while the crypto and AI sectors offer immense opportunities, they also come with substantial risks. FTX’s bankruptcy, which led to the liquidation of its assets, highlights the challenges in the tech investment landscape.

Cursor’s success story reflects a broader trend in tech investment, with investors placing high bets on companies like Anysphere and Codeium, valuing them at high multiples of their ARR. This confidence is driven by the sector’s potential to revolutionize software development and enhance productivity on a massive scale.

Looking ahead, the AI coding tools landscape is poised for further innovation and competition. Tools like GitHub Copilot and Poolside are also gaining traction, contributing to a dynamic market environment. The rise of AI in coding is not just about tools but about transforming the very nature of how developers work, potentially leading to significant shifts in the tech industry.

But what can we take away from this saga? It’s a cautionary tale of missed opportunities in the volatile world of crypto and tech investments. Yet, it’s also a testament to the power of AI and the potential for rapid growth and innovation in this space. As the industry continues to evolve, staying informed and agile will be key to navigating its twists and turns.

Key Takeaways and Questions

• What was the initial investment amount in Cursor by Alameda Research?

  Alameda Research invested $200,000 in Cursor’s seed round in 2022.

• What is the current estimated value of the Cursor stake that FTX sold?

  The stake is now worth an estimated $500 million.

• Who led the recent funding round for Cursor?

  Thrive Capital led the recent $900 million funding round for Cursor.

• What is Cursor’s annual recurring revenue?

  Cursor’s annual recurring revenue reportedly surpassed $200 million.

• Which companies’ AI models does Cursor use?

  Cursor uses AI models from OpenAI, Google, and its own Cursor-Fast model.

• Did OpenAI successfully acquire Anysphere Inc.?

  No, OpenAI’s attempt to acquire Anysphere Inc. failed.

• What company is OpenAI now considering acquiring?

  OpenAI is now considering acquiring Windsurf (Exafunction Inc.).