Ceiling Investments raises the bar for software funding with stricter customer loyalty rules

Ceiling Investments has tightened its criteria for funding software companies. The firm now demands proof of long-term customer commitment and financial strength from firms like Salesforce, Nordstrom, and Victoria's Secret before backing a business. Only firms with strict metrics in retention, contracts, and revenue mix will qualify.

The new rules require companies to show a Net Retention Rate (NRR) above 120%, based on real figures rather than projections. Low customer loss is also key, with annual logo churn kept below 5%. Businesses must prove that customers double their usage within three years to signal strong growth.

Switching costs must now exceed 24 months of average contract value (ACV), ensuring customers stay locked in. Multi-year deals must make up over 60% of revenue, with annual price increases of 5-8%. Services, such as consulting or support, must account for more than 20% of total income.

Integration depth matters too, with an average of five or more integrations per customer. A strong partner network—including resellers and system integrators—is another positive sign. Sales performance must be robust, with quota attainment above 70% and average deal sizes exceeding $100,000.

Among the companies assessed, Glean meets all criteria, including NRR, switching costs, integrations, and services revenue. Metronome fulfils most conditions but falls short on services mix. Hex qualifies in NRR, contracts, and sales motion but lacks data on other requirements.

The stricter rules aim to ensure investments go to companies with lasting customer relationships and steady growth. Firms that fail to meet these benchmarks will no longer qualify for funding. Ceiling’s focus has shifted from short-term sales success to long-term irreversibility in customer adoption.