Listen Labs, a three-year-old market research firm utilizing voice artificial intelligence to conduct customer interviews, has dissolved a signed term sheet for a $125 million Series C funding round. The collapse of the deal comes as the startup engages in acquisition discussions with Salesforce, according to individuals familiar with the matter.
The abandoned financing was set to value Listen Labs at $1.5 billion, with Menlo Ventures leading the investment. In the venture capital sector, walking away from a signed term sheet is an uncommon move and typically viewed negatively by investors.
The funding likely fell through as Listen Labs shifted its focus toward a potential sale to the CRM giant. Business Insider recently reported that Salesforce has been holding talks to acquire the startup for approximately $2 billion. However, those negotiations remain unresolved and do not guarantee a final agreement.
Listen Labs has emerged as a frontrunner in the expanding sector of AI-driven customer research automation. The company currently generates roughly $30 million in annualized revenue, which is approximately triple the earnings of competitor Simile, another startup focused on predicting human behavior, based on financial data shared by sources familiar with the companies’ figures.
In late July, Simile closed a $200 million Series B at a $2 billion valuation, led by Greenoaks. This milestone may have established a new valuation benchmark that influenced Listen Labs’ financing expectations.
Industry investors suggest that if the Salesforce negotiations fail, Listen Labs is expected to re-enter the funding market targeting a valuation of $2 billion or higher. Conversely, some analysts note that Salesforce might ultimately reject the deal due to the steep price tag. Acquiring Listen Labs would bolster Salesforce’s AI capabilities for predicting customer needs, but a $2 billion price represents a 67 times revenue multiple, a figure some experienced negotiators consider excessive.
The startup was co-founded in 2023 by Florian Jüngermann, a former German national champion in competitive computer programming, and Alfred Wahlforss, who previously started a staffing company called Bemlo. The two met while completing master’s degrees at Harvard University.
Listen Labs’ technology automates the creation of survey questions and conducts interviews via audio or video. The resulting data is compiled into reports and presentations, streamlining a process that traditionally requires significant time and expense from human researchers. The platform serves major clients including Microsoft, Canva, Anthropic, and Sweetgreen.
While Listen Labs automates interviews with actual people, other competitors in the space such as Aaru and Simile employ synthetic approaches, using AI to simulate human behavior and forecast responses without direct human interaction. Other rivals in the market include Outset and Keplar.
Previously, Listen Labs was valued at $500 million during a $69 million Series B in late January, which was led by Ribbit Capital and included participation from existing backers Sequoia, Conviction, and Pear VC.
Walking away from signed money is wild. But if they get a $2B buyout, Menlo Ventures will eat their words.
Sixty-seven times revenue? That’s an outrageous multiple. Salesforce better have deep pockets to justify that price tag.