Listen Labs walked away from a $1.5B Menlo round for Salesforce talks

Listen Labs, a three-year-old market research startup that uses voice AI to run customer interviews, walked away from a signed Series C term sheet that would have valued it at $1.5 billion, according to several people with knowledge of the matter. The round, which Menlo Ventures was set to lead at $125 million, never closed. Walking away from a signed term sheet is rare in venture and generally frowned upon, VCs told TechCrunch.

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 talks are not finalized and may not produce a deal, the outlet noted. Listen Labs, Salesforce, Menlo Ventures, and Simile did not immediately respond to requests for comment.

Listen Labs is one of the leading startups in the fast-growing field of automating customer research with AI. 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 company develops survey questions and interviews customers over audio or video. The conversations are packaged into reports and PowerPoint presentations similar to those traditionally produced by human market researchers, and Fortune 500 companies rely on the research to gauge customer needs.

The startup has about $30 million in annualized revenue, roughly three times that of Simile, a competing startup that 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, which one person said likely set a new valuation benchmark for Listen Labs.

If the Salesforce talks collapse, several VCs told TechCrunch they expect Listen Labs to return to market and target a valuation of $2 billion or higher. Acquiring Listen Labs could strengthen Salesforce's AI capabilities by using the startup's AI 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.

The outcome hinges on whether Salesforce closes a deal near the reported $2 billion figure. If it does not, Listen Labs is expected to seek a valuation roughly a third higher than the round it just abandoned.