User acquisition financing is evolving quickly, with more capital sources now available to mobile companies. But more choice brings more complexity. Founders often focus on interest rates, but the real risk lies in hidden fees, rigid terms, and misaligned incentives. The right lender should offer more than money- they should scale with you, support you through performance dips, and stay aligned with your growth.
Aug 04, 2025 - 6
User acquisition (UA) financing is evolving fast. With new players entering the space- VC funds, publishers, SaaS platforms, and specialized lenders- founders now have more options than ever. That’s a good thing. The mobile ecosystem has suffered over the past several years from a lack of growth capital. More capital sources means more flexibility, competition, and innovation.
But more options also means more complexity.
In recent months, I’ve had conversations with many founders weighing different offers. Often, the first (and only) question they have is: “What’s the interest rate?”
And while pricing is critical, it’s just one part of the equation. Choosing the wrong lending partner—in an effort to save a few basis points—can create hidden risks, friction, or even stall your growth.
Here’s a framework founders should use to evaluate UA financing partners:
Compare apples to apples.
Every lender calculates pricing differently – some use fixed interest rates, others charge fees or take revenue share. The cash cost of the facility, or in other words, the dollar value of the interest you are paying to service the loan is the key cost metric to take into consideration here but can easily be misjudged by comparing different structures. Once you have calculated the effective cash cost, it's also important to consider the different features of the loan agreement and understand what you are paying for.
Key questions to ask:
Is the repayment based on cohort’s recoup or is it fixed?
Am I required to draw down a minimum amount every month or is there flexibility?
Are there origination/setup fees? SaaS fees you’re required to take? Exit fees?
Watch out for:
"Cheaper" rates that come with required monthly drawdowns—these often will cost you more in total interest.
Hidden fees billed separately but tied to the financing.
Structures where the lender ultimately controls spend decisions—this is more like a publishing deal than UA financing.
It’s easy to overlook, but capacity is key. Some lenders simply don’t have the fund size or risk appetite to scale alongside a fast-growing app.
Key considerations:
Can this partner grow with your needs over time?
Will I have to renegotiate or switch lenders when I scale?
Even if another lender could step in later, switching has real costs—legal work, underwriting delays, and potentially losing momentum. In today’s competitive UA landscape, pausing your growth for even a month can let your rivals steal share.
Most UA financing structures are tied to performance thresholds—usually based on ROAS payback curves. If you miss those targets, the lender may:
Accelerate repayment
Pause future funding
Potentially trigger default provisions
What to watch for:
Ensure that the thresholds are set where you have room to scale and are comfortable that you won’t be at risk of breaching them, because breaching them will limit your growth and potentially put you in a cash flow crunch
If there are no explicit thresholds, that is actually worse—the lender will have internal risk limits they aren’t disclosing. That means they can stop funding at any time, and you won’t know where those red lines are.
Transparency matters. If they won’t tell you how they think about risk, don’t trust them to be there when you hit a bump.
Your lender will have full access to your UA data, product KPIs, and financials. You need to be confident they won’t use it against you.
If your lender is also a publisher:
Are they using your performance data to optimize their own titles?
Will they cut funding and try to push you into a below market M&A deal?
If your lender is also a VC:
If they’re not on your cap table—are they using your data to go and fund your competitors?
If they are—do you want to consolidate that much influence in one entity? Your whole cap table may not be aligned in every scenario (for example, on M&A offers). You may not want to give more power to your existing investors to control you in these scenarios.
If your lender is a SaaS or tools company:
Are they offering just enough credit to win you as a software customer but won’t scale with you?
How committed are they really to the lending business?
Note: Bottom line, incentives matter. When push comes to shove, companies will act in line with their own interests—which may not align with yours.
Not all loans carry the same risk to you as a borrower. Some are secured by company assets, others are non-recourse and only secured by cohort performance.
Key questions:
Is the loan secured by the company’s assets, or just the user acquisition cohorts?
Is repayment based on actual performance or fixed dates?
Will poor-performing cohorts impact your company’s broader cash flow?
If the lender can come after your balance sheet for underperforming UA spend, that’s a much lower risk for them—and should come with a cheaper rate. Make sure you understand this trade-off.
Some lenders mask this risk with fixed repayment schedules, even if they may appear to be performance-based. Avoid this unless you're confident your cohorts will hit target every time.
When you raise an equity round, it’s widely accepted that you should not simply take the highest valuation — you evaluate the reputation, behavior, and alignment of the investor. The same logic applies — even more critically — to debt financing.
This is a credit agreement. If things go sideways — and at some point, they may — how your lender behaves can literally determine whether you survive or not.
You want to know the answer before you’re in that situation.
Ask for references.
Not just from companies that scaled successfully- ask for intros to teams that:
How did the lender respond to these situations? Were they collaborative or combative? Did they try to fix the problem — or weaponize the default?
If the lender can’t or won’t provide those references, that’s a major red flag.
Beyond structure and economics, you should also assess how much friction your financing partner will introduce into your day-to-day operations. Time and focus are limited — the last thing you need is to burn cycles reconciling spreadsheets or chasing down funding status.
Key questions to ask:
1. Does the lender insert themselves between you and your ad network partners?
2. Do they provide a platform or dashboard where you can:
3. Or will you be stuck managing this manually — with no transparency and a risk of missing critical signals?
Operational complexity can kill momentum just as fast as bad terms. You want capital that works with your system, not against it.
The best UA financing partner will:
If their real motivation is something else- client conversion, M&A, competitive insight- you’re taking on more risk than you think.
Choose your lender like you’d choose a co-founder. The wrong one can slow you down, but the right one should help you grow on your terms.
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