Music startups are our bread and butter at Music Ally, so we always relish any research into how the music-tech sector is growing. A new report from investment and strategy firm Outpost Partners offers plenty of food for thought.
The company has been tracking more than 600 music-tech startups over the last two years, including analysing pitch decks and product demos from more than 130 of them, and investing in 15 through its sister company Fairway Partners Capital.
The report reveals how Europe and North America still dominate the space in terms of deal-flow: in 2025 they account for 55% and 42.5% of deals respectively – partly because that’s “where much of the global music infrastructure is still based” but also due to the rise of GenAI music startups and deals in Europe.
“The average raise in early stage music tech has remained steady at around $2 million. The median is lower – closer to $1 million – as a handful of larger rounds ($5–7 million) inflate the average upward,” explained Outpost Partners in its report.
Meanwhile, the median valuation of these startups is $7m-$8m according to the report, which notes that while these valuations slightly declined in 2024, they are now “trending upwards again – reflecting renewed confidence in the venture market”.
The report also tracks trends in the types of music-tech companies raising funding. There’s a sharp rise in those focusing on music creation – up from 12.1% of deal-flow in 2024 to 23.8% in 2025 so far – again, with GenAI looming large.
Interestingly, despite the industry hype around superfans, the percentage of deal-flow for startups focusing on ‘engagement’ has dropped from 29.3% to 16.7% in that time.
However, Outpost Partners said this is mainly due to “the collapse of crypto-based startups in this space, which have nearly disappeared from the market in 2025”.
There is much more in the full report, including the identification of “the Series A gap” where startups hit a growth and funding roadblock after their initial rounds; and the way startups assuming they can expand from music into other entertainment verticals often underestimate the challenges involved. It’s a very good read.
