For many games studios, securing funding can be a major challenge.

Whether a business is just starting out, looking to scale, or has an experienced team and a proven track record, the challenge is often the same. It may have a strong pipeline of projects, valuable technology, and intellectual property with significant long-term potential, yet much of that value can be hard to leverage when raising finance.

That’s because traditional lending models were not built with games businesses in mind.

A familiar challenge for growing games businesses

Unlike in sectors like manufacturing or property, studios rarely have large amounts of physical assets sitting on their balance sheet. Their value lies elsewhere, often in game engines, code, creative assets, development expertise, strength of the community and intellectual property that may generate revenue for years to come.

The challenge is while these assets can be hugely valuable, they’ve historically been difficult to use as security for conventional borrowing.

As a result, many studios looking to scale have relied on a familiar mix of publisher funding, equity investment, and tax incentives. Each serves a purpose, but each comes with compromises too.

Publisher funding can provide vital capital and sector expertise, but often involves revenue sharing or restrictions around future rights. Equity investment can accelerate growth, but means giving up a stake in the business. Meanwhile, reliefs such as the Video Games Expenditure Credit can provide important support, but are only available once development spend has been incurred.

Games income is very rarely smooth like those more traditional business models including a potentially far steeper cliff after release. That means, for leaders across the sector, the challenge has often been finding funding that supports growth without diluting ownership, signing up to heavily one sided revenue shares  or reducing commercial control over valuable intellectual property.

Why lenders are starting to look at IP differently

That’s why recent developments around IP-backed lending are attracting attention.

Royal Bank of Scotland’s announcement that it’s exploring lending against intellectual property in Scotland may signal a broader shift in how lenders view intangible assets.

It’s still early days. But the fact that mainstream lenders are actively looking at intellectual property as part of a funding assessment is significant.

More importantly, it reflects the reality of the modern economy.

Many of today’s fastest-growing businesses create value through ideas, software, technology, and intellectual property rather than physical assets. The games sector is a prime example. A studio’s most valuable asset may not be found in its offices or equipment, but in the worlds, characters, technology, and expertise it has spent years developing.

If lenders can become more confident in assessing and valuing those assets, it could open up new funding options for ambitious studios.

More choice, not a silver bullet

That doesn’t mean IP-backed lending will be suitable for every business.

Lenders will still want to understand the strength of the intellectual property, the commercial track record of the studio, future revenue potential, and how the underlying assets can be valued. Access to funding is likely to remain selective, particularly while the market develops.

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And in reality, many studios will continue to use a blend of funding sources. Equity, publisher funding, tax incentives, and debt all have a role to play depending on a business’s stage of growth and strategic objectives.

New options are emerging.

The expansion of the Growth Guarantee Scheme, alongside the British Business Bank’s allocation of £500m to its ENABLE programme for IP-backed finance, suggests this is no longer a niche conversation. Government and mainstream finance providers are increasingly looking at how to de-risk lending to innovative SMEs and scale-ups, including businesses whose value sits in intangible assets rather than physical security.

For games studios, that could matter. If these initiatives help turn more funding conversations from “no” into “yes”, they may give studios a more credible route to finance that reflects how their businesses are actually built – around ideas, technology, creativity and IP.

A positive step for the sector

IP-backed lending will not solve every funding challenge facing games studios. But its growing momentum suggests lenders, Government and the wider finance market are beginning to recognise the value of assets that have too often been difficult to leverage.

For the UK games sector, that is an important shift. Studios are built on creativity, technology, communities and IP — assets that do not always fit neatly into traditional lending models, but which can underpin significant long-term value.

If these developments translate into more practical funding options, studios could gain greater flexibility and control over how they grow. That would not just benefit individual businesses, but could strengthen the wider games ecosystem.