Vgames and General Catalyst's Customer Value Fund have already deployed more than $350 million in cohort-backed user acquisition financing for game studios and expect to top $500 million over the coming year, the two firms told Game Dev Wire.

The partnership formalizes a relationship the firms say produced earlier wins with portfolio companies SuperPlay and Candivore. Israel-headquartered Vgames runs roughly $400 million in assets under management and has backed more than 40 companies since launching in March 2020. The firm calls itself the most active mobile gaming venture fund globally.

What the financing actually does

The structure pre-funds a studio's user acquisition and sales-and-marketing spend. In return, the Customer Value Fund takes a capped entitlement to the future lifetime value of the specific user cohorts it bankrolled.

If those cohorts underperform, the fund eats the loss. If they perform, the fund shares in the upside up to a cap. Studios never pay out of pocket when a cohort fails to clear.

"This does not add any risk to the company, and this is very important," said Pranav Singhvi, who leads the Customer Value Fund at General Catalyst. "This is the key thing that allows companies to be a lot more front-loaded about growth."

Singhvi framed the cash-flow gap in plain terms: gaming companies spend cash today on customer acquisition cost, but those dollars can take 12, 18 or 24 months to come back as lifetime value. The fund acts as a dedicated balance sheet for that spend.

How is this different from previous UA debt products?

Singhvi drew a sharp line between cohort-backed financing and the user acquisition debt instruments that preceded it.

"Ultimately, the reason they fizzled out, or never even took off, was that nobody ever deployed it at scale," he said. "The product didn't make sense. It added risk to the company."

Underwriting runs on transaction data piped out of studio data warehouses — Snowflake, Redshift, BigQuery — so the fund can track cohort resilience by category: in-app purchase, in-app ads, real-money gaming.

"From our perspective, what we really seek to do is to find consistency in cohorts," Singhvi said.

That selectivity rules out weaker studios. The fund "cannot work with every company. It's a product that is for high-quality companies only," Singhvi added.

What does this change for studios?

The headline trade: studios swap equity dilution for a financing cost tied to actual cohort performance.

"The outcome for founders is unbelievable, right? Because they are taking capital with interest. It's much less expensive than giving the equity from their own shares," said Eitan Reisel, founder and managing partner of Vgames.

For mobile casual studios, where roughly 60% of a seed round can disappear into marketing, the structure lets founders reserve equity capital for product, engineering and M&A.

Singhvi argued the model reframes mobile gaming valuations entirely. "I actually fundamentally believe that a lot of mobile gaming companies are massively undervalued," he said. "The second you bring in a source of capital like that, the return on equity of that business skyrockets."

Reisel said marketing has become a primary lever for where equity capital goes, even at seed stage, and that user acquisition financing is now the only realistic path to building the next SuperPlay-scale studio. "If you want to build the next SuperPlay, the only way to do that is to access non-dilutive financing. That's actually the new growth capital," he said.

What does the fund target next?

Vgames and General Catalyst are focused on Israel, the Middle East, Europe and the U.S., with mobile and cross-platform studios at the center of the thesis.

Daniel Mironov, partner at Vgames, said the firm spends most of its time walking founders through the dilution math. "This market education works," he said.

The Customer Value Fund launched 5.5 years ago and has deployed more than $5 billion across 65-plus companies outside gaming. The gaming-specific allocation is the new front, and Reisel is betting on fresh founders to drive the next cycle despite three years of contraction in the wider industry.

"If you look at our portfolio, we're one of the only funds that support cross-platform mobile gaming first because the distribution is easier. That's going to be the same in five years," Reisel said. "I don't think gaming is going anywhere."

The $500 million target is the next benchmark to watch, alongside any new portfolio companies that disclose the financing structure publicly.