November 2025
A long time has passed since the days when artists could only do recordings and shows, with no involvement in business other than collecting cash and hoping the label would play fair. Now they are in full charge of creative ideation, songs production and marketing, making them true entrepreneurs. With the power of social media, this also happens much earlier than the moment they sign their first record or distribution deal and start receiving support from industry infrastructure.
Some people would argue that this is a very difficult journey to navigate alone. Historically, the closest allies for artists were managers, sometimes building family-close relationships. And even though in the past managers had relatively simple financial relationships with artists as clients (charging commission on various revenue streams) it is becoming more and more common to consider managers as true full-time partners who split equity interest rather than act as service providers.
If we look at a duo of an artist and a manager as entrepreneurs joining forces to develop the product, it will not look very different from two founders launching a tech startup: one technical (the artist) and one business-oriented (the manager). And similarly to tech founders, artists and managers contribute their skills, knowledge, and networks, but often lack capital. Luckily for tech founders, there is an enormous amount of capital available at early stages from angel investors and VCs, either directly or via startup accelerators such as Y Combinator.
In the music world there is no such thing as an accelerator, at least not in the same sense as in tech. There are initiatives called accelerators, brought to life by industry players including TuneCore, Spotify, and Motown, or by innovative companies such as MasterCard. To a large extent, they all support artists in three main ways: (i) offering mentorship and learning, (ii) leveraging their promotional tools, and (iii) sometimes providing cash grants. Other initiatives (e.g., TechStars Music) were targeting music-related tech startups (but never artists themselves) applying traditional accelerator model. Despite relative success (Endel and Splash went through acceleration) TechStars was shut down in 2023 due to the accelerator model becoming “no longer as relevant for startups”. But they can hardly be compared to tech accelerators in terms of scale, financial impact, and assistance with further fundraising. And continuing success of tech accelerators prove that the model is not dead yet. What is missing and is it time to expect the emergence of artist-focused accelerators?
To assess the potential for music accelerators, we should look at the key fundamentals that made early-stage investing through accelerators viable for investors standing behind them. From the investor’s perspective, there are six fundamental factors making such investments attractive (non-exhaustive list and purely based on my experience and understanding):
Now, thinking about the music industry, it appears to be quite unpredictable and underdeveloped, creating barriers for early- stage investors to enter the game and provide the financial support so desperately sought by emerging artists.
Selection: A&R is one of the trickiest parts of the music business. On Spotify, only 0.5% of artists who make more than $1k achieve $1m in royalties - an equivalent of unicorns in the tech world. For comparison, Y Combinator delivered 4.5% unicorns, about 2x better than the average VC. Besides music being unpredictable, there is a lack of people with a proven track record to take this role. Y Combinator was founded by successful former entrepreneurs who understood what it took to succeed in the tech world. The music business has evolved so much recently that a generation of professionals with such a track record is yet to emerge.
Entrance: Y Combinator invests $125k at a $1.8m valuation. They hope to invest in future unicorns, implying a 555x expected valuation increase. We can assume that an artist generating $1m+ on Spotify should have $5m+ of revenue from all streams, which translates into a $100m valuation at a 20x multiple. To achieve the same upside, artists could be valued at $180k in the beginning, with accelerators seeking a 20–30% stake in exchange for $36–54k—large enough to produce an album and promote it.
Acceleration: artists and managers could benefit from access to the knowledge base and connections provided by strategic partners.
Scale: Y Combinator funds about 500 startups a year and invests $60m. To achieve the same scale in music, it would require $18–27m to be invested into 500 artists and managers. Those artists and managers must be selected from a much bigger number of applicants to ensure quality. While there is no doubt that there are plenty of artists willing to seek external funding, finding that number of qualified managers may be more challenging to achieve. Y Combinator has own platform for matching founders, this may be a solution for artists and managers as well
Structure: it remains relatively rare for up-and-coming artists to set up legal entities in partnership with their managers before achieving initial results. An accelerator might help establish an initial legal structure allowing investors to get equity in the target business and protect shareholder rights.
Use of Funds: main struggles up and coming artists have to deal with in this day and age are content production and marketing. First is the main prerequisite for finding a product-market fit, second determines how fast and efficiently you can reach target audience. Accelerators can be well positioned to facilitate connection between artists and visual creators and marketing professionals (or at least do practical education for DIY artists) ensuring that the funds raised through the accelerator are spent efficiently
Liquidity: thanks to the development of streaming, music copyrights have recently become a well-understood asset class. Better transparency and higher certainty of royalties paid by DSPs attracted financial sponsors seeking predictability. Constantly increasing penetration of paid streaming across the globe also suggests growth potential making music IP even more attractive. Some companies have launched publicly listed trusts dedicated exclusively to music copyrights. What a potential exit may look like for investors into artists? There can be three main options: (i) sale or licensing of the IP to a record label or a JV with a record label as a part of the bigger recording deal with proceeds used to buy back early investors, (ii) sale of the IP or a minority stake in the legal entity to a financial investor (likes of Reservoir, Primary Wave, Litmus Music) and (iii) fractional sale of the IP via such platforms as anotherblock or Duetti (less feasible option now, but likely to become bigger in future). And the list of options will likely keep growing - Dune, an early-stage UK platform where fans buy stakes in artists, just announced a GBP 2m fundraise.
What are the alternatives now? Labels and distributors are the major source of initial capital for artists. But they are not available to everyone. Labels have become more risk-averse since going public. They structure deals as advances rather than equity participation, act as strategic investors, and seek broader rights. Even if functionally accelerators are similar to labels and distributors in terms of value contribution (mostly providing marketing support), they should be able to offer more flexibility and take more risk while letting artists remain independent until they gain more traction and leverage. For some early-stage artists crowdfunding and “love money” could be an option. Main limitations of these sources are also straightforward: scarcity, risks to harm personal relationships, absence of other non-monetary benefits.
Accelerators and VC-type investors could become an alternative for artists who seek independence. Out of the six key factors, only one seems to be critically important and missing now - A&R remains the biggest source of uncertainty. It requires people with recent backgrounds in the music industry who are willing to pick artists outside the label system. Is it the right time for a new generation, raised during the streaming era, to come into play?
Thanks to Alexandre Perrin, Andres Rothschild, and Christine Osazuwa for their feedback and contributions.