It will come as no surprise that MusicTech is a catalyst for major transformations and has been for the past decade. AI, blockchain, enhanced streaming technologies—MusicTech is a hot topic right now, and it’s an exciting time to be part of it. This is well known among the founders of MusicTech companies, but interestingly enough, also increasingly recognized by investors. While the sector remains a relatively small segment within the broader tech industry, investments in MusicTech have grown significantly.

Make no mistake, securing funding is still a challenge, not just because of the nature of the mission but also due to high expectations and the inherent risks associated with the music industry. Let’s take a look at the best practices, the market context, and what you can do to kickstart your fundraising strategy.

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Let’s start at the beginning. Does it make sense for your company to pursue fundraising? It depends on several factors:

• The global strategy for your company: fundraising isn’t a goal, it’s a mean to an end. If external capital isn’t necessary for your growth, it may not be the right path. We talked about it at length here.
• The time and energy it requires: do you have the bandwidth? Is your team ready? As a founder, are you prepared for the intensive process ahead?
• The state of the market: you’re never working alone in an industry. No company operates in isolation. Just as innovation must take industry trends into account, fundraising efforts should be aligned with market dynamics.

MusicTech is a rapidly expanding niche, encompassing a wide range of innovations. It’s tough to find precise key figures on MusicTech funding; there are no specific funds dedicated to MusicTech per say, but it’s safe to say the sector is undeniably gaining traction. The latest studies showed that the sector attracted about $10 billion in equity investment in 2023, nearly doubling the amount secured the previous year. More detailed reports are shared by Water & Music (on growth-stage investments and acquisitions in MusicTech), and they are positive as well. So now may be a better time than ever to seek funding—though it’s important to keep in mind that markets evolve quickly, and the fundraising process is (very) long.

First thing you ought to know: investors in MusicTech are often hiding in plain sight. They come from various background and you’ll need to connect with the right ones. Business Angels (experienced entrepreneurs or industry professionals) are usually looking to get involved in high-growth potential projects. Venture Capital firms (not typically prioritizing MusicTech) are more focused on scalable business models that have already demonstrated efficiency and market potential. Another target you can keep in mind: Corporate Investors. For MusicTech, they’ll likely be music industry companies seeking strategic partnerships and access to innovative solutions.

Early-stage investors prioritize innovation, team strength, and market opportunity, while late-stage investors focus on traction, revenue growth, and scalability. Regardless of the stage, investors assess the market size and potential to determine whether there is a sustainable opportunity. A viable business model with a clear monetization strategy is vital, as is differentiation through technology, user experience, or intellectual property. Investors also place significant importance on the founding team’s expertise and execution ability, as these factors often determine a startup’s long-term success.

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Be very transparent. An investor will look and indicators, measurable success, to evaluate an investment opportunity. Key metrics are your first ally, whether it’s user engagement and retention or licensing, commissions… Provide insights into financial sustainability. The way you present this data significantly impacts investor confidence. Clarity is always a winning strategy. Any attempt to obscure information will only raise concerns. Investors are experts in their field, and any perceived uncertainty will work against you.

Use graphs and benchmarks that can provide context, helping investors understand growth trends over time. Highlighting key partnerships and strategic milestones further strengthens the case for investment. However, data alone isn’t enough—you need to frame it within a compelling narrative.

Keep in mind that decks are arriving on investors’ desks in piles every day. Storytelling is vital for fundraising. An engaging narrative helps establish trust, which is fundamental to investment decisions. When seeking funding, you are not just selling your product or service—you are also selling yourself. As a founder, you embody your company’s vision, and a clear, confident identity can make all the difference in building investor confidence.

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Very practically speaking, a pitch follows a structured approach. It begins by defining the problem your startup aims to solve, clearly articulating the market need. Next, it presents the solution, explaining how your technology or service offers a unique advantage. Market positioning comes next, outlining your target audience and the scale of the opportunity. A strong business model demonstrates how revenue will be generated. Demonstrating traction—through key milestones, user growth, or partnerships—adds credibility. Finally, investors need to see why your team is best equipped to execute this vision, highlighting expertise and execution ability.

Some points of attention:

• Clear Business Model: we need to understand it as we read it. This is essentially telling how you plan on generating revenue and sustain growth in the long run.
• Realistic Market Analysis: trying to overestimate a market works against you. You need to show expertise, based on solid data and explain how and why your project fits in.
• Talk About Users: your service/tool/tech is important, although it needs to be put in context as well. Talk about the end users, who will benefit from your project and in what capacity.
• Regulations & Legal: especially in the “everything AI-powered” era, take the time to mention legal aspects (even questions remaining to be solved by regulations) if they apply.
• Anticipate Questions: your deck has to be clear and concise, you usually plan on presenting your idea so keep in mind that you’ll have some tough questions coming your way, have some additional data and arguments in your sleeve just in case.