Listen Labs, a market research startup leveraging voice AI to conduct customer interviews, recently signed a term sheet for a $125 million Series C round at a $1.5 billion valuation, with Menlo Ventures poised to lead the investment, according to several sources familiar with the situation. However, that round ultimately never closed, the sources said. Listen Labs walked away from the signed term sheet—a move that is highly unusual in the venture capital world and generally viewed unfavorably by investors, according to VCs.

The financing is believed to have fallen apart due to acquisition discussions with Salesforce. The CRM giant has recently been in talks to acquire Listen Labs for roughly $2 billion, as reported by Business Insider. Those conversations are still ongoing and may not lead to a finalized deal, the outlet noted.

Listen Labs stands out as one of the leading players in the fast-growing field of automating customer research through AI. The three-year-old company generates approximately $30 million in annualized revenue—about three times more than Simile, a rival startup focused on predicting human behavior, according to two individuals familiar with the companies’ financials. In late July, Simile announced it had secured a $200 million Series B at a $2 billion valuation, led by Greenoaks—a move that likely set a new valuation benchmark for Listen Labs, one source said.

While acquiring Listen Labs could enhance Salesforce’s AI capabilities by using the startup’s technology to better anticipate customer needs, the CRM giant may ultimately decide that paying a 67 times revenue multiple is too rich a price, 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.

The company’s AI generates survey questions and conducts customer interviews over audio or video. The resulting conversations are then compiled into reports and PowerPoint presentations, similar to those traditionally created 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 conventional market research can be costly and time-consuming, often taking weeks to complete.

Listen Labs’ technology helps cut both the time and expense of these projects, allowing companies to quickly understand how customers react to product changes and iterate more efficiently. The startup’s clients include Microsoft, Canva, Anthropic, and Sweetgreen.

Listen Labs and Simile aren’t the only startups using AI to disrupt the customer research market. In addition to Simile, competitors in the space include Outset, Keplar, and Aaru. While some platforms automate interviews with real people, others—such as Aaru and Simile—take a synthetic approach, using AI to simulate human behavior and predict responses without conducting any interviews 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 existing backers Sequoia, Conviction, and Pear VC.