Playing the Hand at the Right Time - exits in the AI era
Apr 25, 2026
VCs love to talk about sourcing, picking, winning, and helping.
In the AI era, add one more: knowing when to exit.
Kenny Rogers had the VC lesson right in The Gambler: the hard part is knowing when the hand has played out.
Cursor may be the cleanest example yet. A reported $60B deal for a company with explosive growth, negative gross margin, and a buyer that needed to win the coding race.
In normal software, that combination would raise alarms. In AI, with growth like this and a strategic buyer like SpaceX, it can produce a generational outcome.
The tension is right here: huge growth, ugly margins, and a strategic buyer willing to pay anyway. The bet was growth, usage, and the data flywheel. That bet worked.
At roughly 22x annualized revenue, Cursor looks expensive by old SaaS rules. But the Jefferies data makes the deal feel less like an outlier: half of acquired GenAI companies since 2022 have sold for 20x+ LTM revenue. Scarcity value is real.
That scarcity premium makes sense here. Coding is the biggest AI application market so far, and Cursor had the product velocity, usage, and data to matter. Building a model stack to defend that lead against Claude and others would have required enormous capital. A strategic buyer with compute and urgency can look at the same business very differently than a late-stage investor would.
Every startup has a window where it can realize maximum value. For a rare few, that window comes long after IPO. But in AI, where a lead can disappear almost overnight, knowing when to sell based on future financing needs, dilution, and competitive threats may be just as important as knowing what to build.
In the AI era, sourcing, picking, winning, and helping get you to a great company. Exiting is what turns it into a great return. That is not quitting on the dream. It is maximizing value at peak AI valuations.
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