Listen Labs scrapped a $1.5B round amid Salesforce talks

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 at a $1.5 billion valuation, with Menlo Ventures set to lead the round, according to several people with knowledge of the matter. That round never closed — Listen Labs walked away from the signed term sheet, a rare move in the venture world that VCs say is generally frowned upon.

The financing likely collapsed because of acquisition talks with Salesforce, which has recently held discussions to buy Listen Labs for around $2 billion, Business Insider reported. Those discussions aren’t finalized and may not result in a deal, according to the outlet. If talks with Salesforce collapse, several VCs told TechCrunch they expect Listen Labs to return to market targeting a valuation of $2 billion or higher.

Listen Labs is one of the leading startups automating customer research with AI. The three-year-old company has about $30 million in annualized revenue, about three times more than competitor Simile, which predicts human behavior, according to two people familiar with both companies’ financials. In late July, Simile announced 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. Acquiring Listen Labs could strengthen Salesforce’s AI capabilities by using the startup’s technology to help predict customer needs, but the CRM giant may ultimately decide that paying a 67-times revenue multiple is too steep, according to a person with experience negotiating exits to Salesforce.

Listen Labs’ AI develops survey questions and interviews customers over audio or video, then packages the conversations into reports and presentations similar to those traditionally produced by human market researchers — work that Fortune 500 companies rely on to gauge customer satisfaction but that is typically expensive and can take weeks. The startup, co-founded in 2023 by Florian Jüngermann and Alfred Wahlforss, who met while pursuing master’s degrees at Harvard, counts Microsoft, Canva, Anthropic, and Sweetgreen among its customers. It was previously valued at $500 million after a $69 million Series B in late January led by Ribbit Capital, with participation from Sequoia, Conviction, and Pear VC. Competitors in the space include Outset, Keplar, and Aaru, along with Simile.

Why it matters

Walking away from a signed term sheet to pursue a $2 billion acquisition instead shows how aggressively strategic buyers like Salesforce are now competing with venture capital for AI startups — and how founders are willing to gamble on a bigger outcome even at reputational risk in the VC world.