The Glasgow-based technology firm fell into administration in August, owing more than £60m to creditors after a severe downturn in sales. All 28 staff were made redundant.

The state-backed SNIB was the largest investor, lodging claims for £37.5m in equity and loans. However, administrators from Interpath Advisory have warned they “do not anticipate any sums will become available” for SNIB or the second-largest creditor, Santander, which is owed £14.2m.

Other public bodies facing losses include Scottish Enterprise (£2.9m) and HMRC (£1.5m), with administrators stating it is unlikely sufficient funds will be raised from asset sales to repay them.

The failure has drawn criticism from the Scottish Conservatives, with Alexander Stewart commenting: “The scale of these losses are a major cause for concern since it’s taxpayers who ultimately foot the bill.”

Founded in 2006, M Squared Lasers supplied advanced laser and quantum instruments globally. After a peak revenue of £17.8m in 2023, sales plummeted to just £4.2m this year, resulting in a £13.7m loss.

This is the second SNIB-backed company to fail in 2025, following the collapse of developer Krucial in June.

A spokesperson for SNIB, which receives its funding from the Scottish Government, defended its strategy. The spokesperson told The Times: “As Scotland’s development bank, we were established to fill an identified gap in the Scottish funding landscape by supporting scale-up companies with high-growth potential. Some failures will be inevitable, and our strategy is based on the entire portfolio over the long term.”