Listen Labs, a market research startup that uses voice AI to conduct customer interviews, recently signed a term sheet for a $125 million Series C round at a $1.5 billion valuation. Menlo Ventures was set to lead the round, according to several people familiar with the matter.
However, the funding round did not close. Instead, Listen Labs walked away from the signed term sheet, a rare move in the venture capital industry that investors generally view unfavourably.
The financing may have fallen through because of acquisition discussions with Salesforce. The CRM giant has recently held talks to acquire Listen Labs for around $2 billion, according to a report. However, the discussions remain ongoing and may not ultimately result in a transaction.
Listen Labs ranks among the leading startups in the rapidly expanding market for AI-powered customer research. The three-year-old company generates approximately $30 million in annualised revenue, according to two people familiar with the companies’ financials. That figure stands at roughly three times the revenue of Simile, a competing startup that uses AI to predict human behaviour.
In late July, Simile announced a $200 million Series B at a $2 billion valuation, with Greenoaks leading the round. According to one person, the deal could establish a new valuation benchmark for Listen Labs.
If Salesforce’s acquisition discussions fail, several venture capital investors expect Listen Labs to return to the fundraising market and target a valuation of $2 billion or more.
An acquisition could strengthen Salesforce’s AI capabilities by incorporating Listen Labs’ technology to help predict customer needs. However, Salesforce could ultimately determine that paying approximately 67 times revenue represents too high a valuation, according to a person with experience negotiating exits to 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 staffing startup Bemlo. The two founders met while pursuing master’s degrees at Harvard.
Listen Labs’ AI technology develops survey questions and interviews customers through audio or video. It then converts those conversations into reports and PowerPoint presentations similar to the materials traditionally created by human market researchers.
Fortune 500 companies use this type of research to understand customer needs and measure satisfaction with their brands and products. However, traditional market research can prove expensive and take several weeks to complete.
Listen Labs’ technology aims to reduce both the cost and turnaround time of these projects. As a result, companies can gain faster insights into customer responses to product changes and use those insights to improve their offerings more efficiently.
The startup’s customers include Microsoft, Canva, Anthropic, and Sweetgreen. Meanwhile, Listen Labs and Simile face competition from other AI-focused customer research startups, including Outset, Keplar, and Aaru.
While some platforms automate interviews with real people, others, including Aaru and Simile, use synthetic approaches. These platforms rely on AI to simulate human behaviour and predict responses without conducting interviews with actual customers.
Listen Labs previously reached a $500 million valuation when it announced a $69 million Series B in late January. Ribbit Capital led that round, while existing investors Sequoia, Conviction, and Pear VC also participated.
