Listen Labs walked away from a signed term sheet for a $125 million Series C at a $1.5 billion valuation after talks with Salesforce to acquire the company for around $2 billion began.
Several sources with knowledge of the matter say the round never closed. This is a rare occurrence in the venture world and one that is generally frowned upon by investors.
The financing likely collapsed because of acquisition talks with Salesforce. The CRM giant has recently held talks to buy Listen Labs for around $2 billion, Business Insider reported. The discussions are not finalized, however, and may not result in a deal, the outlet notes.
The market context
Listen Labs is one of the leading startups in the field of automating customer research with AI. The three-year-old startup has about $30 million in annualized revenue, about three times more than Simile, a competing startup that predicts human behavior, according to two people familiar with the companies’ financials. In late July, Simile announced that it had closed a $200 million Series B at a $2 billion valuation led by Greenoaks — likely setting a new valuation benchmark for Listen Labs, one person said.
If talks with Salesforce collapse, several VCs told TechCrunch that they expect Listen Labs to return to market and target a valuation of $2 billion or higher.
While acquiring Listen Labs could strengthen Salesforce’s AI capabilities by using the startup’s AI to help predict customer needs, the CRM giant may ultimately decide that paying a 67 times revenue multiple is too steep 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.
Who built the company
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.
How the tool works
Listen Labs’ AI develops survey questions and interviews customers over audio or video. The resulting conversations are then packaged 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 and Simile aren’t the only startups using AI to disrupt the customer research market.
Besides Simile, competitors in the space include Outset, Keplar, and Aaru. While some platforms automate interviews with real humans, others startups — like Aaru and Simile — take a synthetic approach, using AI to simulate human behavior and predict responses without interviewing anyone at all.
Previous funding
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.
