Listen Labs, a market research startup that uses voice AI to conduct customer interviews, recently signed a $125 million Series C term sheet at a valuation of $1.5 billion, with Menlo Ventures set to lead the round, people familiar with the matter said.
But that round never ended, officials said. According to the venture capital firm, Listen Labs walked away from a signed term sheet, a rare occurrence in the venture industry and one that is generally frowned upon.
It is highly likely that financing failed due to acquisition negotiations with Salesforce. The CRM giant recently negotiated to acquire Listen Labs for about $2 billion, Business Insider reported. However, the paper notes that negotiations have not been finalized and there is a possibility that no agreement will be reached.
Listen Labs is one of the leading startups in the rapidly growing field of customer research automation with AI. The three-year-old startup has annual revenue of about $30 million, about three times as much as rival startup Simir Inc., which predicts human behavior, according to two people familiar with the companies’ finances. In late July, Simile announced it had closed a $200 million Series B led by Greenoaks at a $2 billion valuation. This is likely to become a new evaluation benchmark for Listen Labs, one of the people said.
If talks with Salesforce fall through, several venture capitalists told TechCrunch they expect Listen Labs to return to the market and aim for a valuation of more than $2 billion.
Acquiring Listen Labs could strengthen Salesforce’s AI capabilities by using the company’s AI to predict customer needs, but the CRM giant may ultimately decide that paying a 67x revenue multiple is too high a valuation, according to people familiar with exit negotiations with Salesforce.
Listen Labs, Salesforce, Menlo Ventures and Simile did not immediately respond to requests for comment.
Listen Labs was co-founded in 2023 by Florian Jüngermann, a former German national champion in competitive computer programming, and Alfred Wahlforss, who previously founded a staffing startup called Bemlo. The two met while pursuing master’s degrees at Harvard University.
Listen Labs’ AI creates survey questions and interviews customers via audio or video. The resulting conversations are packaged into reports and PowerPoint presentations similar to those traditionally created by human market researchers.
Fortune 500 companies rely on this type of research to assess customer needs and satisfaction with their brands and products, but traditional market research is expensive and can take weeks to complete.
Listen Labs’ technology helps reduce time and cost on these projects, allowing companies to quickly understand customer reactions to product changes and iterate more efficiently.
The startup’s customers include Microsoft, Canva, Anthropic, and Sweetgreen. Listen Labs and Simile aren’t the only startups using AI to disrupt the customer research market.
Besides Simile, other competitors in this space include Outset, Keplar, and Aaru. While some platforms automate interviews with real humans, startups like Aaru and Simile are taking a holistic approach, using AI to simulate human behavior and predict responses without interviewing anyone.
Listen Labs was previously valued at $500 million when it announced a $69 million Series B round led by Ribbit Capital in late January, with participation from returning backers Sequoia, Conviction, and Pear VC.
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