Raise capital

A capital raise is when a business increases its equity. This can also happen at the expense of equity. There are also cases where members or employees invest money in the business. The purpose of the capital raise is usually to finance some kind of development or to comply with a legal requirement.

During the capital raise, the company's equity is replaced by a certain amount by the company's owners. This is usually done in order to meet some regulatory requirement. 

The capital raise is typically managed by an accountant and countersigned by a lawyer. It is also accompanied by the amendment of the articles of association. 

The money needed to increase the share capital can come from several sources. It is a simple and convenient solution if the company carries out the capital raise at the expense of equity capital in excess of the share capital. If this is not available or insufficient, then money must be invested in the company. In such cases, the owners of the business reach into their pockets and complete the capital raise by paying new regular deposits. 

There are also examples of employees putting a part of their business share on the market. In such cases, the capital raise is made from the contributions of the company's employees. In exchange for the money paid in, the employees acquire an ownership stake in the business. The property granted to workers in this way is usually not large.

Capital can and should be raised not only for legal compliance. The capital raise is justified even if the company's share capital had to be touched. If such a case occurred, the missing part must be replaced. 

The managers and owners of the company decide that they want a higher amount of share capital also because of the foundation of business decisions. However, if it is necessary to increase the share capital for such a reason, then we are already talking about capital raising.