Listen Labs, a market research startup leveraging voice AI to conduct customer interviews, recently signed a term sheet for a $125 million Series C round aimed at a $1.5 billion valuation, with Menlo Ventures set to lead, according to sources.
However, the round never closed, as insiders confirmed. Listen Labs walked away from the signed term sheet, a rare occurrence in the venture industry that is generally frowned upon by venture capitalists.
The financing collapse is likely attributed to acquisition talks with Salesforce. The CRM giant has reportedly discussed purchasing Listen Labs for approximately $2 billion, though Business Insider notes these discussions are not finalized and may not lead to a deal.
Listen Labs stands out as a leading startup in the rapidly expanding field of automating customer research using AI. The three-year-old company boasts about $30 million in annualized revenue, which is roughly three times more than that of Simile, a competitor specializing in predicting human behavior.
If talks with Salesforce collapse, VCs anticipate Listen Labs will return to the market with a target valuation of $2 billion or higher.
While purchasing Listen Labs could enhance Salesforce’s AI capabilities by utilizing the startup's technology to predict customer needs, the CRM giant may ultimately decide that the 67 times revenue multiple is prohibitively steep.
Listen Labs, Salesforce, Menlo Ventures, and Simile have not responded to requests for comment.
Co-founded in 2023 by Florian Jüngermann, a former German national champion in computer programming, and Alfred Wahlforss, who previously founded Bemlo, the two met at Harvard.
Listen Labs' AI develops survey questions and conducts interviews via audio or video, subsequently packaging the conversations into reports and PowerPoint presentations, much like traditional human market researchers.
Fortune 500 companies rely on this research to assess customer needs and brand satisfaction, though traditional methods are costly and time-consuming.
Listen Labs' technology reduces the time and expense of these projects, allowing companies to quickly understand customer reactions to product changes and iterate more efficiently.
The startup's client roster includes Microsoft, Canva, Anthropic, and Sweetgreen. Competitors in the space include Outset, Kepler, and Aaru, with some platforms utilizing AI to simulate human behavior and predict responses without direct interviews.
Listen Labs was previously valued at $500 million after announcing a $69 million Series B round in late January led by Ribbit Capital, with participation from returning investors Sequoia, Conviction, and Pear VC.
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