mLED, a spin-out from Strathclyde University's Institute of Photonics, has raised the funds through a loan note taken up by the university, a fund run by the Scottish Investment Bank and members of the firm's technical advisory council.
The company has raised £1.5 million in four funding rounds since its launch as a stand-alone company in 2010. It plans to bring in further cash next year to coincide with its products entering the commercial stage.
Its LEDs can be used in wearable technology and other consumer electronics. The bright, low-energy lights have applications in augmented reality devices such as Google Glass, which display interactive images through a headset.
"We believe that the commercial traction that we are now seeing in North America, Europe and Asia plus the welcome given by key players in the burgeoning wearables market to CTO Jim Bonar's low-power-consumption micro-display technology road map are indicative of a very exciting future for mLED," said chief executive Seonaidh MacDonald in a statement.
Mr MacDonald joined the firm in September 2013. mLED also signed up Dr Tom Baer, a professor of applied physics at the University of Stanford and a visiting professor at Strathclyde University, as a non-executive director this summer.
Chairman Nick Kuenssberg, who also runs textiles group Scott & Fyfe, said the fundraising "speaks volumes for the progress that mLED is making."
He said the firm expects to have "some exciting good news" about customers and funding early next year.