Listen Labs, a market research startup utilizing voice AI for customer interviews, had recently signed a term sheet for a $125 million Series C funding round, valuing the company at $1.5 billion. Menlo Ventures was expected to lead this round, as reported by several informed individuals.
However, the deal did not reach completion. Listen Labs chose to withdraw from the signed term sheet, an unusual move in the venture capital realm that typically attracts disapproval from investors.
The financing likely fell through due to discussions with Salesforce about a potential acquisition. According to Business Insider, the CRM leader has been in talks to acquire Listen Labs for approximately $2 billion. These discussions are not yet concluded and might not result in a finalized deal, the outlet noted.
Listen Labs is recognized as a prominent player in the burgeoning field of AI-driven customer research automation. With annualized revenue of around $30 million, the three-year-old company generates about three times the revenue of Simile, a competing startup in human behavior prediction, according to sources familiar with their financials. In late July, Simile disclosed that it secured a $200 million Series B at a $2 billion valuation led by Greenoaks, potentially setting a new valuation bar for Listen Labs, according to one source.
If negotiations with Salesforce do not succeed, several venture capitalists informed JS that they anticipate Listen Labs will re-enter the market, aiming for a valuation of $2 billion or more.
Acquiring Listen Labs could enhance Salesforce’s AI capabilities by leveraging the startup’s technology to foresee customer needs. Nonetheless, the CRM giant might decide that a valuation equating to 67 times Listen Labs’ revenue is excessively high, according to a source with experience in negotiating Salesforce exits.
Requests for comments from Listen Labs, Salesforce, Menlo Ventures, and Simile were not immediately answered.
Founded in 2023 by Florian Jüngermann, a former German national champion in competitive computer programming, and Alfred Wahlforss, who previously founded the staffing startup Bemlo, Listen Labs emerged from the duo’s collaboration during their master’s studies at Harvard.
Listen Labs’ AI technology crafts survey questions and conducts customer interviews via audio or video. The collected conversations are then transformed into reports and PowerPoint presentations, resembling those traditionally generated by human market researchers.
Fortune 500 companies depend on this type of research to assess customer needs and satisfaction with their products and brands. However, conventional market research is costly and can take weeks to complete.
Listen Labs’ technology cuts down on the time and expense of such projects, allowing companies to swiftly grasp customer reactions to product changes and improve them more efficiently.
The startup’s clientele includes Microsoft, Canva, Anthropic, and Sweetgreen. Listen Labs and Simile are not the only companies using AI to innovate in the customer research industry.
In addition to Simile, other competitors include Outset, Keplar, and Aaru. While some platforms automate interviews with real people, others, like Aaru and Simile, simulate human behavior using AI to predict responses without direct interviews.
Previously, Listen Labs was valued at $500 million when it announced a $69 million Series B round in late January, led by Ribbit Capital with contributions from repeat backers Sequoia, Conviction, and Pear VC.
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