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MTUK's first-ever state of the nation report on the UK music tech sector urges the Government to ensure music tech remains a cornerstone of the UK's creative economy
 

A comprehensive new report from 
Music Technology UK (MTUK), the UK trade association dedicated to supporting music tech startups,  reveals that the UK music tech sector is at a critical inflection point. 
 
UK music tech companies attracted £360 million in investment between 2020 and 2024, largely fuelled by the heightened interest in tech applications during and immediately after the pandemic. However, despite the UK being a global leader in music tech innovation and home to the third biggest music market in the world, the momentum is slowing, with the funding gap now threatening the future growth and independence of this fertile sector.
 
The inaugural Sound Investments: The Case for UK Music Tech report analyses the strengths and challenges of the burgeoning UK music tech sector, as well as the investment trends across its key verticals. These include audio technology, royalty solutions, hardware, live streaming, software and app development, playlisting tools, music management, marketing platforms and more.
 
The UK music tech investment opportunity
Naming audio tech as the top-funded UK music tech subcategory since 2020, followed closely by marketing tools and live streaming, the report highlights the enormous opportunity for investors in UK music tech. Global recorded music revenues are projected to reach £81 billion by 2032[1] and the UK is uniquely positioned to capitalise on this growth and help unlock the industry's value potential, given its unrivalled musical heritage and impressive technological innovation -  from legendary brands like Marshall and Abbey Road Studios, to today's cutting-edge AI applications.
 
With the UK Government's Industrial Strategy aim to almost double business investment in the creative industries, from £17 billion to £31 billion by 2035[2], UK music tech has a prime opportunity to secure a substantial and much-needed share of that investment, to create a cohesive and world leading domestic sector with international influence.
 
Ten year trends highlight a startup culture but a scaleup challenge
According to the report, the pandemic marked a tipping point for music tech. Funding spiked in 2021 at over £161 million, followed by a post pandemic market correction. As a result, £360 million was invested in UK music tech companies between 2020-2024.
 
However, MTUK's data reveals that only 4.6% of companies founded in 2023-2024 received investment, compared to 20% for companies founded in the eight years prior. Moreover, London captures 94% of investment, despite being home to only half of UK music tech companies.
 
The report also raises serious questions about long-term domestic value retention. While UK investors support early-stage companies, US investors provided 39% of later-stage funding between 2015-2024, with 48% of acquisitions of UK music tech companies being by American firms.
 
MTUK calls for urgent action to capitalise on the UK's music tech potential
The report calls for immediate government intervention to address the current systemic challenges and make the UK the obvious choice for music tech innovation, investment and global scaling. These actions include:
 
●      Recognition of music tech as a core sector within the creative industries. The Government's Industrial Strategy identified the creative industries as one of eight key growth-driving sectors. By ensuring music tech is recognised as integral to the creative industries, the Government will support every part of the music ecosystem.
●      Establishment of a dedicated Music Tech Innovation Fund from the £4 billion British Business Bank Industrial Strategy Growth Capital initiative.
●      Enhanced promotion of EIS and SEIS tax relief schemes for early-stage businesses to unlock more angel investment.
●      Tailored export programmes for priority markets including Australia, India and the European Union, while maintaining a constant presence in the U.S. and other key global markets.
●      Fast-tracked regulatory clarity on AI to enable fair compensation frameworks without stifling tech innovation. Regulatory clarity will decide whether the UK becomes a world leader or loses out to countries with governments that make faster decisions.
 
Matt Cartmell, Chief Executive, Music Technology UK, said: "The UK faces a simple choice: lead or lose this transformative opportunity. We have brilliant innovators creating world-class technologies, but they're being forced to seek US capital and ultimately US ownership because our domestic ecosystem lacks the infrastructure to support scaling companies. This isn't just about individual businesses - it's about whether the UK will amplify its status to become a global leader in creative technology."
 
Hannah Williamson, Senior Investment Manager, Edge VC, said: "Music is part of the beating heart of the UK's creative industries and it's no surprise that so much innovation is emerging in this space. The UK has an incredible pool of talent, world-renowned music heritage and a growing ecosystem of founders using technology to shape the future of how music is created, consumed and monetised. There are exciting opportunities here for investment, growth and global impact."
 

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08 Aug 2025

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  • How the Swedes altered the songwriting process (see Features)

07 Aug 2025

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06 Aug 2025

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05 Aug 2025

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  • Spotify to raise subscription prices in Europe, Latin America, Asia, Africa, and the Middle East (see Digital)

04 Aug 2025

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01 Aug 2025

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31 Jul 2025

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30 Jul 2025

  • Statement on the AI Act implementation measures adopted by the European Commission (see News)

29 Jul 2025

  • Why songwriters are reinventing their role (see Comment)

28 Jul 2025

  • British acts playing EU festivals down 26% on pre-Brexit (see Analysis)