Listen Labs, a startup that uses voice AI to interview customers, recently backed out of a signed funding agreement. The company had a term sheet for a $125 million Series C round at a $1.5 billion valuation.
Menlo Ventures was set to lead the round. Sources familiar with the matter say the deal never closed.
Walking away from a signed term sheet is uncommon in the venture capital world. Investors generally view it as a step companies avoid taking.
Why The Deal Fell Through
The likely reason behind the collapsed funding round is a separate set of talks. Salesforce has reportedly discussed buying Listen Labs for close to $2 billion.
Business Insider first reported on the acquisition talks. The discussions have not been finalized and may not lead to a completed deal.
Listen Labs, Salesforce, Menlo Ventures, and Simile did not respond to requests for comment on the matter.
If the Salesforce talks fall apart, people close to the situation expect Listen Labs to return to the funding market. They anticipate the company would seek a valuation of $2 billion or more.
One source pointed to Salesforce's potential hesitation. Paying a valuation equal to 67 times revenue may be too high a price for the CRM company to accept.
Listen Labs' Business and Competition
Listen Labs was founded in 2023 by Florian Jüngermann and Alfred Wahlforss. The two met while studying for master's degrees at Harvard.
The company's AI writes survey questions and interviews customers through audio or video calls. It then turns those conversations into reports and slide presentations.
This type of work is traditionally done by human market researchers. It can be slow and costly for companies that need quick feedback on products or services.
Listen Labs says its technology speeds up that process. Clients include Microsoft, Canva, Anthropic, and Sweetgreen.
The startup is not alone in this space. Competitors include Simile, Outset, Keplar, and Aaru.
Some of these companies interview real customers using AI, similar to Listen Labs. Others, like Simile and Aaru, use AI to simulate human responses without talking to actual people.
Simile closed a $200 million Series B round in late July. That round valued the company at $2 billion, led by investment firm Greenoaks.
Listen Labs currently earns about $30 million a year in revenue. That figure is roughly three times higher than Simile's reported revenue, according to two people familiar with both companies' finances.
Industry investors say Simile's new valuation may now serve as a pricing guide for Listen Labs going forward.
Listen Labs previously raised a $69 million Series B round in late January. That round valued the company at $500 million and was led by Ribbit Capital.
Sequoia, Conviction, and Pear VC also took part in that earlier round as returning investors.
For now, the outcome of the Salesforce talks remains unclear. Whether the acquisition closes, or Listen Labs returns to raise new venture funding, will determine the company's next chapter.
