Taxpayers have lost £4.5m on a bankrupt musical instrument company despite a rescue deal that will see other lenders repaid, in one of the first high profile casualties of the Treasury’s £1.1bn pandemic fund for start-ups.

Administration documents for Roli, which makes high-tech keyboards used by musicians including Stevie Wonder and Grimes, showed that it secured £4m from the Government’s Future Fund scheme last July. Half of this – £2m – was provided by the fund itself, while Roli also owed £2.5m to HMRC.

The fund was set up to help start-ups weather the pandemic by borrowing money from the taxpayer, as long as it was matched by private investors. Loans of up to £5m are converted into equity stakes when a company next raises investment, with the fund taking ownership of shares at a 20pc discount.

The Treasury revealed on Tuesday that the fund had already taken stakes in 158 companies, out of 1,190 that took loans.

However, the fund is also braced for failures from companies that fail to secure new financing. Roli, which raised $75m (£54m) since it was founded in 2009, fell into administration last week after overestimating demand for its products and failing to secure new venture capital financing. It also faced "significant pressure" from HMRC over £2.5m in taxes owed by the company.

The taxpayer’s interest in the company will be wiped out despite Roli’s main creditor, the Silicon Valley investor Triplepoint, recouping the vast majority of its lending.

Triplepoint, whose debt is secured, is expected to receive £27m of £33.6m owed by Roli as the company is spun into a new entity, Luminary, with backing from venture capital firm Hoxton Ventures. The deal will retain 68 staff including chief executive Roland Lamb.

Roli’s uncertain state had been highlighted by Triplepoint before the Future Fund invested, with the lender writing down the value of its debt in 2019.

The documents show that other investors included Grimes, the Canadian musician and girlfriend of Elon Musk, whose real name is Claire Boucher, and the Royal College of Art.