UK Music Tech Sector At “Critical Inflection Point”

Music Technology UK (MTUK), the UK trade association dedicated to supporting music tech startups, has released a new report on the state of the region’s music tech sector called _Sound Investments: The Case for UK Music Tech_. The industry, it states, is at “a critical inflection point.”

Key takeaways:

• UK music tech companies attracted £360 million in investment between 2020 and 2024.

• Audio tech was the top-funded subcategory, followed by marketing tools and livestreaming.

• The momentum is slowing, with the funding gap “now threatening the future growth and independence” of the sector.

• MTUK’s data reveals only 4.6% of companies founded in 2023-2024 received investment, compared to 20% for companies founded in the eight years prior.

• London captures 94% of the investment, despite being home to only half of the UK music tech companies.

• The report also flags the issue of long-term domestic value retention, stating that 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.”

Call to action:

• The report calls for government intervention to make the UK the “obvious choice for music tech innovation, investment and global scaling.”

• It highlights five key areas:

• Recognizing the music tech sector as a core sector within the creative industries to ensure government support via its Industrial Strategy.

• Establishing 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 EU, while maintaining a constant presence in the US and other key global markets.

• Fast-tracked regulatory clarity on AI to enable fair compensation frameworks without stifling tech innovation.

What they said:

• Matt Cartmell, Chief Executive, Music Technology UK: “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.”