Listen Labs drops $1.5B deal as Salesforce eyes $2B buyout. AI market research startup Listen Labs has backed out of a signed $125 million funding round after tech giant Salesforce opened talks to acquire the company for nearly $2 billion. Listen Labs had already signed a term sheet for a Series C round led by Menlo Ventures, which placed its valuation at $1.5 billion. However, the startup walked away before the deal could close. Insiders say the sudden shift happened because Salesforce came forward with an acquisition proposal. According to a report, Salesforce is considering buying the startup for around $2 billion. Founded in 2023 by Harvard graduates Florian Jüngermann and Alfred Wahlforss, Listen Labs uses AI to replace traditional market research. Its software conducts automated voice and video interviews with customers, then turns those conversations into practical research reports for businesses. The company already serves major clients, including Microsoft, Canva, Anthropic, and Sweetgreen. Listen Labs currently generates roughly $30 million in annual revenue, about three times more than its main competitor, Simile. The rivalry between both companies appears to have driven this decision. In late July, Simile raised $200 million at a $2 billion valuation in a round led by Greenoaks. That deal set a new price standard for AI market research tools, likely pushing Listen Labs to demand a higher valuation for itself. Listen Labs plans to return to private investors and target a valuation of at least $2 billion, if the buyout talks with Salesforce fall through. However, some analysts say paying $2 billion for a startup making $30 million a year means paying 67 times its annual revenue, a price they believe might be too steep even for Salesforce. Meanwhile, the startup has grown over the past year. In January, Listen Labs raised $69 million in a Series B round led by Ribbit Capital, with support from Sequoia, Conviction, and Pear VC, which valued the business at $500 million at the time. Listen Labs operates in a growing sector alongside competitors like Outset, Keplar, and Aaru. While Listen Labs focuses on interviewing real humans with AI, rivals like Simile and Aaru use AI models to simulate how buyers might respond without speaking to actual customers. As at the time this report was filed, Listen Labs, Salesforce, Menlo Ventures, and Simile have all declined to comment publicly on the matter.

AI research startup Listen Labs scrubbed a $1.5B funding round for Salesforce talks. Listen Labs walked away from a signed Series C term sheet from Menlo Ventures, sources say. 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. But that round never closed, the people said. Listen Labs walked away from the signed term sheet, a rare occurrence in the venture world and one that is generally frowned upon, according to VCs. 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. Listen Labs is one of the leading startups in the rapidly growing 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. 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. 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. 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.