Listen Labs, a three-year-old market research startup that uses voice AI to conduct customer interviews, recently made the unusual decision to walk away from a signed term sheet for a $125 million Series C funding round at a $1.5 billion valuation. Menlo Ventures was set to lead the round, but the financing never closed. The reason appears to be acquisition talks with Salesforce, which has recently held discussions to buy Listen Labs for around $2 billion, though those talks are not finalized and may not result in a deal.
Walking away from a signed term sheet is a rare occurrence in the venture capital world and one that is generally frowned upon by investors. However, the potential acquisition by Salesforce represents a significantly higher valuation than the funding round would have provided. For Salesforce, acquiring Listen Labs at $2 billion would represent a 67 times revenue multiple, which some experts with experience negotiating exits to the CRM giant suggest may ultimately prove too steep.
Listen Labs has established itself as one of the leading startups in the rapidly growing field of automating customer research with AI. The company has about $30 million in annualized revenue, which is approximately three times more than Simile, a competing startup that predicts human behavior. In late July, Simile closed a $200 million Series B at a $2 billion valuation led by Greenoaks, likely setting a new valuation benchmark for Listen Labs. If the Salesforce talks collapse, several venture capitalists expect Listen Labs to return to market and target a valuation of $2 billion or higher.
The startup 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. Listen Labs was previously valued at $500 million when it announced a $69 million Series B round in late January led by Ribbit Capital, with participation from returning backers Sequoia, Conviction, and Pear VC.
Listen Labs’ AI technology develops survey questions and interviews customers over audio or video, then packages the resulting conversations into reports and PowerPoint presentations similar to those traditionally produced by human market researchers. Fortune 500 companies rely on this type of research to gauge 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 the time and cost of these projects, enabling companies to quickly understand how customers are reacting to product changes and iterate on them more efficiently.
The startup’s customers include Microsoft, Canva, Anthropic, and Sweetgreen. Listen Labs faces competition from several other startups using AI to disrupt the customer research market, including Simile, Outset, Keplar, and Aaru. While some platforms automate interviews with real humans, others take a synthetic approach, using AI to simulate human behavior and predict responses without interviewing anyone at all. Simile’s revenue is about one-third of Listen Labs, highlighting the competitive dynamics in this emerging market.
