MTUK’s second annual Sound Investments report finds growth-stage investment has collapsed 90% since 2020, as AI raises the stakes for government action
London, 1 June 2026 – A comprehensive new report from Music Technology UK (MTUK), the UK trade association for the Music Tech sector, reveals that the UK’s Music Tech industry faces a structural funding crisis with funding for growth-stage companies falling 90%, from £101 million in 2020 to £10 million in 2025.
Sound Investments 2026: Back the Sector, produced in partnership with research house Beauhurst and with Lead Sponsor support from KPMG UK, analyses six years of investment data across 922 UK Music Tech companies.
Its central finding is unambiguous: the UK’s primary challenge is not starting companies – it is scaling them.
Key Findings: The Investment Picture
The report finds that UK Music Tech companies attracted over £809 million in total investment between 2020 and 2025, peaking at £183 million in 2021.
Since the 2021 peak, annual investment has declined sharply, falling to £68.8 million in 2025 – a 51% contraction across the period. This marks a significantly steeper decline than the wider reduction in overall UK tech funding during the same period – a decline of just 4.4%.
Put in an international context, in 2020 UK investment in Music Tech equated to 76% of US funding; by 2025, that figure had fallen to 21%.
The composition of that decline is revealing. Investment in seed-stage companies more than doubled over the six-year period, rising from £8.4 million in 2020 to £22.1 million 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 £101 million in 2020 to £10 million in 2025.
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.
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.”
A critical moment for the Music Tech sector
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 £31 billion by 2035. The British Business Bank has announced a £4 billion Industrial Strategy Growth Capital initiative, with creative industries among eight identified growth sectors. The time to position Music Tech explicitly within these frameworks is now.
- Competitive pressure: In an increasingly competitive global market for technology talent, capital and ownership, 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.”
MTUK’s call to action for the UK government
The report makes three consolidated asks for government action:
- Name Music Technology as a distinct category in policy, in funding, and in data:
- Include Music Tech in ONS SIC codes, 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. MTUK is prepared to convene its design.
- 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 1 June as part of its SXSW London programme. The launch event will take place from 2:05 – 2:45 PM at Juju’s Bar & Stage, ahead of a two-day activation at H.O.M.E. across Tuesday 2 and Wednesday 3 June. The programme will feature high-profile panels, networking, pitching sessions, and international industry dialogue, alongside daily networking breakfasts and lunches.
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.”
Download the full report here.
ENDS
Media enquiries: MTUK@fourthpillarpr.com
About Music Technology UK
Music Technology UK is the UK’s trade association, support community, and forum for the Music Tech sector – bridging the gap between specialist music industry knowledge and the support needed for early-stage companies. MTUK was founded to drive recognition of the UK as a global leader in Music Tech innovation. With over 290 members, MTUK’s aim is to drive growth, foster innovation and build a healthier ecosystem.
About KPMG UK
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