The Scottish National Investment Bank has revealed it made a net loss of £138m last year.
The state-owned body cited the collapse of three of its early investments – including its first, Glasgow-based laser company M Squared.
However, the bank also generated an income of £32m, comfortably covering its operating costs of £20m.
Chairman Willie Watt called the losses "painful" but said the bank had learned lessons.
The Scottish National Investment Bank, which is independent from government, was set up by ministers in 2020 with a mission to fund business and innovation to boost economic growth.
Its report for the 2025-26 financial year, external revealed a net loss of £138m, including £65m of realised losses from the failure of three early investments – M Squared Lasers, the electric car charging firm Trojan Energy and the satellite and digital company Krucial.
There was a further £85m of unrealised losses after rocket manufacturer Orbex and medical technology firm Pneumowave entered administration.
The bank also invested a record £374m in Scottish ventures, while its operating costs were below budget.
Willie Watt has served as chairman of the bank since it was launched in 2020
Watt said: "The realised and unrealised losses we have seen in this financial year reflect that and are not where we want to be.
"While these figures are painful for the bank, they are particularly so for the businesses which failed and of course for their teams."
He cited a tough economic environment with "tighter financial conditions, cautious sentiment and more challenging fundraising".
Watt added: "We have learned a lot over the past five years and continue to improve and tighten our investment processes along with stricter criteria for potential investments as set out in our investment strategy."
Chief executive David Ritchie called the losses "regrettable and disappointing", but said he was determined to demonstrate that a "commercially disciplined development bank can deliver for Scotland".
M Squared Lasers – the Glasgow technology firm was hailed by Nicola Sturgeon as "a great example of the ambitious and innovative companies we have here in Scotland" when the national investment bank was launched in 2020. It went into administration in 2025 with debts of £64m
