According to the UK trade association for the music tech sector, funding for growth-stage companies has fallen 90% in five years, from £101 million in 2020 to £10m in 2025.

Sound Investments 2026: Back the Sector analyses six years of investment data across 922 UK music tech companies. The report was produced in partnership with research house Beauhurst and with lead sponsor support from KPMG UK,

Its central finding is that the UK’s primary challenge is not starting companies, but scaling them.

Music tech investment breakdown

The report – available to download here – found that UK music tech companies attracted over £809m in total investment between 2020 and 2025, peaking at £183m in 2021.

Since the 2021 peak, annual investment has declined sharply, falling to £68.8m in 2025 – a 51% contraction across the period. It marks a significantly steeper decline than the wider reduction in overall UK tech funding during the same period – a decline of just 4.4%.

Meanwhile, major international markets continue to grow rapidly. While in 2020 UK investment in music tech equated to 76% of US funding, by 2025, that figure had fallen to 21%.

The report reveals a stark drop-off for growth-stage companies when it comes to funding.

Investment in seed-stage music tech companies more than doubled over the six-year period, rising from £8.4m in 2020 to £22.1m in 2025.

At the same time, investment in growth-stage companies – those requiring capital to move from product-market fit to international expansion – collapsed from £101m in 2020 to £10m in 2025.

According to the report, this lack of growth-stage investment forces many UK companies to look overseas for investment and, in some cases, consider relocating their operations to markets with greater access to capital and liquidity

The report also found that the sector remains heavily reliant on domestic investors, highlighting the need to strengthen its visibility and appeal within international investment ecosystems.

UK investors accounted for the majority of funding at every stage of growth, with 67.2% of deals involving only UK-based investors. Even when UK companies secured international backing, it was typically alongside a domestic lead investor.

Among international contributors, the US was by far the largest source of overseas capital, participating in 14% of all deals.

Music tech has a vital role to play in driving economic growth, attracting investment, and shaping the future of music and innovation

Ian Murray

Matt Cartmell, chief executive of Music Technology UK, said: “When we published the first Sound Investments report last year, we argued that UK music tech was undervalued, underinvested, and underrepresented. A year on, that is changing – but not fast enough. The instruments exist: the Sector Plan, the British Business Bank, IP-backed lending. Now we need to ensure music tech is named, backed and able to use them.”

Music technology sector’s ‘critical moment’

The report identifies three converging forces that make this a “pivotal moment” for the future development of the UK music tech sector:

AI’s impact on the market: Generative AI has created a new kind of music tech buyer: technology platforms with an urgent commercial need for licensed music data, rights infrastructure and proprietary content pipelines. UK companies building in these areas are increasingly becoming acquisition targets before they have had the chance to scale domestically.

UK’s policy window: The Creative Industries Sector Plan, published in June 2025, sets a target of growing annual creative industries investment from £17 billion to £31bn by 2035. The British Business Bank (BBB) has announced a £4bn Industrial Strategy Growth Capital initiative, with creative industries among eight identified growth sectors.

Competitive pressure: In an increasingly competitive global market for technology talent, capital and ownership, the report argues that the UK must deploy strategies to support the music tech sector, so that the economic value it creates is retained in the UK.

Creative Industries Minister Ian Murray said: “Music tech has a vital role to play in driving economic growth, attracting investment, and shaping the future of music and innovation. This report highlights both the potential of the sector in the UK, but also the challenges facing many of our pioneering organisations.”

“Through our Creative Industries Sector Plan, we are committed to turbocharging support for high-growth creative businesses, supporting innovation, and ensuring the UK remains one of the best places in the world to work in creative technology.”

The UK has a world-class base of music tech innovation, and the opportunity now is to turn that strength into more companies scaling successfully into global leaders

Nat Gross

MTUK’s call for UK government support

The MTUK report identifies three areas for government action:

Name music technology as a distinct category in policy, in funding, and in data:

– Include Music tech in the ONS SIC code review, so that UKRI, the BBB, and HMRC can identify music tech companies as a distinct category, measure their economic contribution, and design instruments for them.

– Name music tech within the BBB’s Industrial Strategy Growth Capital programme as a defined sub-sector of the creative industries.

– Include music tech within the working definition of ‘createch’ (the combination of creative innovation with cutting-edge tech) used in funding eligibility criteria.

Build the investment infrastructure the sector needs to scale:

– Commission a dedicated music technology Innovation Fund – a co-investment vehicle structured in partnership with the BBB and private investors, with music tech as the named sector.

– Extend the BBB’s IP-backed lending mechanism to cover technological and data IP, not only content rights.

Connect regional music tech ecosystems to investment infrastructure:

– Extend Innovate UK’s engagement with music tech to regional programmes, naming ‘music tech’ within regional innovation funds where creative industries are already eligible.

– Recognise Liverpool’s MusicFutures model – targeted investment connected to a domain-rich music ecosystem – as a template for replication in Glasgow, Manchester, Bristol, and comparable cities.

– Play an active convening role in connecting UK music tech to international investor ecosystems, through trade missions, major international events, and facilitated introductions to non-UK funds active in creative technology.

MTUK will launch Sound Investments 2026: Back the Sector on Monday (June 1) as part of its SXSW London programme.

Nat Gross, partner and EMA head of KPMG Media Practice, said: “The UK has a world-class base of music tech innovation, and the opportunity now is to turn that strength into more companies scaling successfully into global leaders.

“Sound Investments 2026 gives a clear view of how the sector is evolving, and where better alignment between capital, expertise and networks can accelerate growth. We are proud to support MTUK as part of that, helping founders access the insight, connections, and investment they need, and strengthening the ecosystem shaping tomorrow’s media.”

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