The money was raised by angel syndicate Equity Gap, along with venture capital firm Par Equity, US syndicate Aero-Den and the Scottish Investment Bank.
The move has led to five new skilled jobs which have been filled by former oil and gas supply chain workers.
The company said it planned to add further posts in the future.
Vert Rotors was founded by Olly Dmitriev in 2013 and produces ultra compact low-vibration gas compressors for aerospace, medical and other applications.
The funding will be used to increase capacity at Vert's manufacturing facility in Gracemount and expand its customer base.
Mr Dmitriev said: "This investment brings valuable highly skilled manufacturing jobs to Edinburgh and allows Vert Rotors to increase our sales outreach.
"Our products are fully manufactured in Scotland and exported to Europe and the USA. We look forward to scaling up our operations following this investment."
Jock Millican, from Equity Gap, said: "Vert Rotors has potential to disrupt the established marketplace significantly with its high quality products.
"Olly has an excellent track record in business and has a clear vision for the future of the company."

The man is said to have been trying to gather details about a German parliamentary committee that is investigating claims of US espionage.
German authorities have asked the US ambassador for "swift clarification".
The US National Security Agency (NSA) was last year accused of bugging the phone of Chancellor Angela Merkel as part of a huge surveillance programme.
The scale of the agency's global spy programme was revealed in documents leaked last year by a former intelligence contractor, Edward Snowden.
The revelations about the NSA put a strain on ties between Germany and the US and raised feeling in Germany against American surveillance.
The BBC's Steve Evans in Berlin says the new allegation of American spying on an ally may make it harder for the US to get German help in its efforts to oppose Russian activity in Ukraine, and also to control Iranian nuclear ambitions.
German media say the man arrested this week is a 31-year-old employee of the federal service, the BND or Bundesnachrichtendienst.
The German federal prosecutor's office confirmed the man's arrest, but gave no other details.
A spokesman for Ms Merkel said she had been informed of the arrest, as had the members of the nine-strong parliamentary committee investigating the activities of foreign intelligence agencies in Germany.
"The matter is serious, it is clear," spokesman Steffen Seibert told the Frankfurter Allgemeine newspaper,
Der Spiegel news magazine said the man was believed to have passed secret documents to a US contact in exchange for money.
However, one unnamed politician told Reuters news agency the suspect had offered his services to the US voluntarily.
"This was a man who had no direct contact with the investigative committee... He was not a top agent,"   the source said.
Germany is particularly sensitive to reports of espionage on its territory because many of its citizens from the formerly communist east of the country were spied upon by the Stasi secret police.
Gas compressor maker Vert Rotors has been given a £1.5m funding boost to scale up manufacturing at its factory in Edinburgh.
[NEXT_CONCEPT]
An employee of Germany's intelligence service has been arrested on suspicion of spying for the US, reports say.