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The UA financing market is experiencing a wave of new entrants, and it’s important to distinguish between two different types of players. On one side, you have standalone direct lenders—funds and specialty finance companies whose core business model is lending and whose returns come from interest spread and fee income. On the other, you have SaaS platforms, payment providers, and other peripheral companies exploring embedded financing as an adjacency to their core offering.

Metica, RevenueCat, and Adapty have all recently announced embedded financing products that sit alongside their SaaS businesses. I’ve spoken with several others in payments and SaaS who are either planning launches or actively exploring the space. For these companies, the logic is compelling: they’re already sitting on all the underwriting data and own the customer relationship. Offering financing becomes both an incremental revenue stream and a powerful retention mechanism for their core business. They don’t need lending to be a standalone profit center the way a dedicated lender does, which means they can potentially offer keener pricing and still achieve their strategic objectives.

But there’s a subtle risk here. These platforms may view lending as a natural extension of their data advantage, which of course it is – but lending is rarely as straightforward as it appears. Whether you’re doing factoring, cohort financing, or some hybrid model, the operational complexity, portfolio management, and potential workout scenarios require dedicated expertise. Having the data is table stakes; knowing how to underwrite, structure, and manage risk through game performance cycles is where the real skill lies.

Meanwhile, among standalone lenders, I’m tracking more than ten private credit funds trying to better understand this space, many looking to replicate models without clear differentiation. When multiple players chase the same deals without a distinct edge, the pressure to deploy capital could lead to compromised underwriting standards – accepting weaker cohort performance benchmarks, loosening covenants, or underpricing risk just to get deals done.

And while I don’t expect anyone to publicly announce it, defaults will likely happen in 2026. The combination of aggressive growth targets, market saturation in certain genres, and potential sloppiness in underwriting creates conditions where some facilities inevitably won’t perform as modeled. The response from the more sophisticated lenders will be to sharpen their pencils: more conservative cohort selection, tighter covenants, cross-collateralization across cohorts, and more aggressive amortization schedules if performance benchmarks aren’t hit.

The market is maturing, which means it’s also becoming more unforgiving.

Institutional Capital Awakening

The entry of institutional private credit into mobile UA financing marks a significant milestone, but it also signals the beginning of commoditization pressures that will separate the strategic players from the capital tourists.

I’m seeing direct lending funds and special situations groups begin to engage seriously with the space, typically for transactions of $25 million or more. Unlike earlier entrants who built platforms to originate smaller deals at scale, these credit funds are approaching this as individual, bespoke transactions. The flexibility in these strategies allows them to tailor products to specific borrower needs—building covenant packages around cohort behavior and sector dynamics rather than applying cookie-cutter credit models.

This is a positive development. Institutional capital brings underwriting discipline, operational rigor, and deeper pools of liquidity for larger studios. But it also introduces a challenge: these funds need to demonstrate they can deploy capital efficiently. Committing to a new asset class without the origination capability to put capital to work creates an awkward conversation with LPs about why committed capital is sitting idle.

And this is where origination pipeline becomes the critical differentiator. Capital without deployment is just cash earning money market returns. The players who will win are those with strong brand visibility – firms like PvX Partners – who combine deep domain expertise and vertical focus which is in my view essential to succeed. Credibility requires consistent engagement with the ecosystem, genuine understanding of game/app unit economics, and trusted relationships with CFOs and founders.

What I find particularly interesting is how origination is increasingly driven by content and education. From my own experience with founding the Mobile Finance Collective and writing The Capital Stack, I’ve seen how treating education as a long-term origination strategy builds sustainable competitive advantage.

Meanwhile, LPs are getting considerably smarter about this asset class. With more deals in the market and greater visibility, the model is better understood. LPs appreciate the risk/reward characteristics, particularly the relatively low correlation to macro risks that impact traditional private credit. As they gain sophistication, they’re also becoming more discerning about where risk is truly being priced.

This will inevitably put downward pressure on returns as competition intensifies. The lenders who will maintain attractive returns are those who can differentiate on origination capability, underwriting sophistication, or product innovation—not those who simply show up with capital.

The Embedded Finance Revolution

The emergence of embedded financing from SaaS platforms, payment providers, and attribution tools represents a fundamental shift in how UA financing will be delivered.

The structural advantage is difficult to overstate. These platforms are already ingesting all the underwriting data in real-time: revenue, retention curves, cohort performance, payment volumes, attribution data. For a standalone lender, acquiring this data requires integrations and ongoing monitoring. For an embedded finance player, it’s their core product.

The strategic rationale goes well beyond lending revenue. Offering financing reduces churn, increases lock-in, and drives volume growth in their core business. More UA spend means more payment fees, more attribution data, more analytics seats. The lending product doesn’t need to be wildly profitable standalone if it’s driving significant incremental volume through the core offering.

This is why embedded finance will likely be priced more aggressively than standalone lenders can match on pure spread. The economics work differently when lending is a strategic tool rather than the entire business model.

However, execution risk is real. Beyond operational complexity, there are regulatory considerations, capital requirements, and reputational risk. What happens to your brand reputation when you have to enforce on a customer? When an embedded lender has to accelerate repayment or pursue collection, it creates tension with the core value proposition.

For standalone lenders, embedded finance represents both competition and opportunity. The lenders who will thrive are those who can move faster, structure more creatively, and handle the edge cases constructively when they show up.

Geographic & Vertical Expansion

I’m also tracking the emergence of localized cohort financing models – particularly in Cyprus, India, and Turkey, with founders betting that local TAM is sufficient to support dedicated lending platforms. Whether there’s enough depth and scale in these territories remains to be seen, and without demonstrable traction will face significant capitalization challenges when trying to raise institutional capital.

Beyond geography, the more significant opportunity is in the adjacent consumer apps vertical. Consumer apps overtook gaming in app store revenues last year, yet financing products for consumer app developers remain relatively unsophisticated. Every subscription category—dating, fitness, productivity, entertainment—is potentially addressable with cohort financing.

The underwriting mechanics are similar in principle: modeling user acquisition costs, conversion rates, churn, and lifetime value. The core skill transfers well, but expertise needs to be developed category by category.

Then there’s e-commerce, specifically CPG subscription businesses. Models like Dollar Shave Club demonstrate how consumer behavior can be cohorted and lifetime value predicted with reasonable accuracy. E-commerce introduces complications—inventory risk, working capital in physical goods, credit risk on brand counterparties—but these don’t disqualify the opportunity, they just require different expertise.

The addressable market is expanding rapidly beyond mobile just gaming. Lenders who can credibly move into consumer apps and CPG e-commerce will access TAMs multiples larger than gaming alone. It’s all about understanding and being able to model the core unit economics of customer acquisition and monetization, regardless of whether the revenue stream is from digital or physical goods.

The Technical Evolution: pLTV Goes Mainstream

One of the quieter but more significant shifts in 2026 is the mainstreaming of predictive LTV models. Companies like Metica and Churney are making pLTV modeling accessible to studios that previously lacked the data science resources for these capabilities.

CFOs want better forecasting accuracy, and UA teams want greater bidding certainty. What’s made this possible is the combination of accessible ML/AI compute resources and accumulated market knowledge about mobile user behavior.

For lenders, pLTV models provide third-party validation for underwriting decisions and enable more dynamic risk pricing. For studios, better LTV prediction translates directly into capital allocation decisions. High confidence in predicted returns means more aggressive bidding in auctions and more efficient capital deployment.

That said, pLTV has limitations. Models predict user behavior based on historical patterns but struggle with intangibles: will the studio continue shipping engaging content? Will the game maintain its community? These factors materially impact long-term retention but are difficult to capture.

Nevertheless, pLTV is playing an important role in unlocking the next wave of growth in UA financing. As these models improve and become more widely adopted, they’ll be a key enabler of market maturation.

The VC Reckoning

Growth equity firms will continue to face challenges in 2026 as CFOs across sectors become increasingly sophisticated about capital efficiency. The days of using equity to fund sales and marketing expenditure are ending, not because VCs have changed their minds, but because finance leaders have woken up to the real cost and the more capital efficient ways of financing customer acquisition spend.

When you’re burning equity to fund customer acquisition that generates predictable, measurable cash flows, you’re solving a financing problem with the most expensive capital available. Whether you’re a mobile game, a SaaS business, a consumer app, or a D2C brand, if your cohort economics are solid and your payback periods are reasonable, there’s likely a non-dilutive financing solution that preserves equity for genuinely strategic uses: product development, hiring, infrastructure, and initiatives that can’t be financed against future cash flows.

CFOs are now equipped with better alternatives and the analytical frameworks to evaluate them. The companies that optimize their capital stack – matching the right capital to the right use case – will significantly outperform those that default to growth equity simply because it’s familiar.

This shift will redefine what “value-add” means for growth investors. The winners will be those who help their portfolio companies access appropriate non-dilutive financing, not those who insist on writing bigger checks into UA/S&M budgets.

Looking Ahead

The mainstreaming of non-dilutive financing in 2026 represents a maturation of the mobile gaming and apps ecosystem that benefits everyone: studios get access to smarter capital, investors get exposure to an attractive risk/return profile, and the overall market becomes more efficient. But as with any maturing market, the winners won’t be determined by who shows up with capital but be determined by who executes with discipline, differentiates genuinely, and continues to innovate on product and process. Vertical focus and understanding will continue to be important.

For CFOs and finance leaders, this is your moment. The capital stack optimization tools that were once only available to the largest companies are now accessible across the market. Use them thoughtfully. For lenders and investors entering this space, recognize that origination capability, underwriting sophistication, and vertical expertise matter far more than balance sheet size. And for the ecosystem as a whole, this shift toward more efficient capital allocation means better games, better apps, and more sustainable businesses.

2026 won’t be without its challenges. Defaults will happen, some players will struggle to raise capital and possibly exit the market, and pricing will compress. But but these are the growing pains of a market finding its equilibrium. The fundamentals remain strong, the opportunity continues to expand, and the players who approach this space with intellectual rigor, vertical understanding and constructive humility can build enduring franchises.

The future of financing of UA across many sectors is clearly moving towards non-dilutive financial products. The question is WHO will define what that future looks like.