Embedded Finance: A New Breed of Lending Products in Mobile Gaming and Apps

There’s a growing trend emerging in mobile gaming and apps — one that could reshape how user acquisition (UA) is financed and who controls the flow of capital.

UA is becoming more scientific again. With improved modeling of predictive LTV (pLTV) and a deeper understanding of user behavior, acquisition is once again a highly measurable, performance-driven function. As a result, many studios are now able to predict payback periods and profitability with impressive accuracy.

This predictability has highlighted a long-standing inefficiency: equity capital is too blunt and expensive a tool to fund UA. Over the past few years, more flexible, non-dilutive financing instruments have emerged — from cohort-based lending models to asset-backed facilities built on the residual value of existing user bases.

Most of these innovations have come from startup alternative lenders or venture capital funds launching sidecar credit strategies. These groups typically bring a more data-driven approach than banks, with tech-enabled underwriting and faster deployment. Still, they face a common constraint: their business model depends on extracting a return from the capital itself.

Banks, meanwhile, continue to provide traditional facilities like AR lines — benefiting from a structurally lower cost of capital via deposits — but generally lack the underwriting agility or risk appetite needed to compete in UA-specific financing.

But now, a new approach is beginning to take shape — led by SaaS and payments companies adjacent to the mobile ecosystem. And it could have far-reaching implications.

Embedded Lending: Aligning Incentives at the Point of Need

Let’s quickly recap how traditional lenders operate. Whether it’s a credit fund or an alt-lender raising capital from a credit fund, the model is the same: raise capital from LPs, deploy it into loans, and generate returns through interest margins. The transaction is one-dimensional — they’re in the business of yield.

Now consider a SaaS or payments platform with a usage-based revenue model. These businesses don’t need to extract value from lending margins. Their upside comes from increased volume flowing through their core platform. Capital becomes a means to drive customer growth, which directly lifts their revenues, retention, and enterprise valuation.

This shift in incentives fundamentally changes the dynamics of lending:

They can afford to offer capital at or near cost — not because they lack sophistication, but because they don’t need the margin to win.

They win through volume, not spread.

Why Embedded Finance Is Structurally Superior

Let’s take a SaaS business serving app developers — whether in payments, attribution, monetization, analytics, or compliance. These platforms are often sitting on underwriting-grade data, updated in real time: revenues, retention curves, churn risk, historical spend patterns.

They already know more about the customer’s health than any external lender ever could.

An embedded lending product within such a platform offers powerful advantages:

1. Built-in customer acquisition — No sales motion required; the product is already integrated in the user experience.
2. Superior data for underwriting — No need for third-party APIs or diagnostic tools; they already have the full picture.
3. High trust and adoption — Studios already rely on these platforms day-to-day. A capital product launched within that context has instant credibility.
4. White-label flexibility — Lending products can be structured “powered by” third-party capital providers, allowing operational separation while retaining control.
5. Accretive to SaaS metrics — Lending enhances customer growth and retention, which are directly tied to enterprise value. It’s a strategic lever, not just a revenue line.

Most importantly, embedded providers can offer cheaper, more flexible capital than external lenders — because their margin is made elsewhere.

Why This Matters to Private Credit Funds

For private credit funds, this is not a threat — it’s an invitation.

Rather than lending directly to gaming or app studios (where data access is limited and risk higher), credit funds can provide capital to platforms with embedded data, distribution, and customer trust already in place.

This model creates:

• Diversification under the hood — The SaaS platform becomes the master borrower, distributing capital across hundreds of studios.
• First-loss alignment — Platforms may choose to take a subordinated position or guarantee part of the book, enhancing risk-adjusted returns.
• Reduced acquisition costs — No need to originate borrowers one by one; the platform handles distribution.
• Superior risk management — Underwriting is based on real-time operational metrics, not static financials or trailing data.

Embedded finance can enable highly scalable, risk-aware capital deployment, and the private credit funds that move early will gain access to a growing segment of yield backed by next-generation infrastructure.

The Disruption of Traditional Lenders

The challenge for traditional alternative lenders and banks is clear: they lack the depth of data and incentive alignment that embedded finance platforms can leverage.

External lenders need to charge for risk — and often must build trust and integrations from scratch. Embedded platforms already have both.

In a world where one player is lending at cost to drive retention, and another is lending for margin — the cost-of-capital advantage becomes a competitive weapon.

If this model scales — and all signs suggest it will — it could fundamentally reshape how UA is financed. It’s not hard to imagine a future where the best capital doesn’t come from a lender at all, but from the very tools that power your business.

Final Thoughts

Embedded finance isn’t just a product innovation — it’s a structural shift in how capital is distributed and monetized.

For mobile app and gaming studios, it promises faster, cheaper, smarter access to growth capital.

For SaaS platforms, it unlocks new revenue streams and deeper customer lock-in.

And for private credit funds, it offers a highly scalable, data-rich entry point into one of the most dynamic corners of the digital economy.

The takeaway? The next generation of capital might not be raised — it might be embedded.

In the Mobile Finance Collective, we dive deep into topics like these, and so much more, in a more personal setting. Whether it’s over a virtual coffee ☕, one-on-one chats, or exclusive networking events, our community is where finance leaders in apps and gaming connect, share insights, and stay ahead.

Want to join and connect with industry peers? DM me to learn more about how your studio’s CFO or finance team can get involved! 🚀