What You Need To Know About Raising Capital (2025 Updated)

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What’s Involved In Capital Raising?

So you’ve started a business and you’re looking to raise some capital. Capital raising, whether it be from friends and family or from investors, can provide significant growth opportunities if your business is ready to take the next step in 2025. With evolving market trends and an increasingly digital funding landscape, having the right legal framework in place is more critical than ever.

Capital raising is a complex process – from designing an effective investment structure and negotiating deal terms, to drafting precise legal documentation and completing corporate actions. Our team at Sprintlaw is ready to walk you through your options and help protect your company while you achieve your business goals in today’s fast‐paced environment.

When Should I Start Thinking About Capital Raising?

The moment you begin raising capital, additional stakeholders come into the picture. Although the process might feel daunting, it opens the door to transformative growth opportunities – especially for businesses that are poised for high-growth or require substantial funding. In 2025, planning early for capital raising is not just advisable; it’s a strategic imperative.

Businesses that may benefit from capital raising include:

High-growth businesses: organisations with strong scalability – a key factor that appeals to investors keen on rapid expansion.
Businesses that need substantial funding: Sometimes, funds from venture capital or angel investors can exceed what traditional debt financing offers, allowing your company to seize major opportunities.
Businesses with a flexible timeline: Equity funding, while rewarding, often involves a lengthy process. It’s ideal when your business can afford to plan for long-term strategic capital infusion.

The Different Types Of Capital Raising

Debt Raise

A debt raise is when a company borrows money and repays it with interest. Typically, debt capital comes in the form of loans or bonds. The primary benefit of debt capital is the speed of access to funds, although you must consistently meet your repayment obligations regardless of business performance.

Equity Raise

Equity capital is raised by selling shares of your company. This method does not require repayment like a loan, but it does mean sharing future profits with investors in the form of dividends and through stock valuation. For many startups, this is a preferred method as it can bolster growth without burdening cash flow.

Convertible Note Raise

Raising funds using a convertible note blends the benefits of both debt and equity financing. Initially structured as a debt instrument, it includes provisions to convert the invested amount (plus any agreed interest) into equity at a future date, often when a subsequent funding round occurs.

SAFE Raise

A SAFE raise utilises a SAFE Note, where the investor’s cash injection is provided without the burden of debt. Similar in concept to a convertible note, a SAFE Note converts into equity upon the occurrence of a predetermined trigger event – typically during an equity financing round – but without accruing interest. We’ve detailed what SAFE notes involve here.

It’s also worth noting that in 2025 the capital raising environment has evolved with digital platforms and fintech innovations helping streamline investor due diligence and regulatory compliance. For instance, many startups are now choosing to work with legal technology services that integrate with the latest compliance tools to ensure that all documentation stays up to date with current standards.

What Documents Do I Need For Capital Raising?

Depending on the type of raise you’re undertaking, different legal documents are essential to protect both your business and your investors. Typically, the initial terms are agreed upon in a short-form Term Sheet before you proceed to execute the comprehensive, legally binding agreements outlined below.

Debt Raise

Loan Agreement – This document outlines the specific deal between you and your investor, detailing the principal, interest rate, repayment schedule, and what occurs in the event of late or missed payments. Loan Agreements can be structured as secured or unsecured based on the arrangements made.

Security Agreement – For secured loans, a Security Agreement is also required. This document grants the lender a registered security interest in past, present, and future assets of your business via the Personal Property Securities Register (PPSR), ensuring that the lender has a claim over the secured property should you default.

Equity Raise

Share Subscription Agreement – This agreement outlines the investor’s commitment to pay for a specified number of shares at an agreed price, thereby establishing the key relationship between your company and the investor.

Shareholders Agreement – Essential for higher-stake investments, this contract governs decision-making processes, dispute resolution, and the procedure if a shareholder decides to exit the company. As your business grows, having such a document in place is invaluable.

Convertible Raise

Convertible Note – This document details the terms under which an investor lends money that can convert into equity upon the occurrence of a specified event, such as an upcoming equity round.

SAFE Raise

SAFE Note – Like a Convertible Note, a SAFE Note outlines an investment that will convert into equity. However, it is not considered debt, meaning it doesn’t accrue interest, and provides a simpler, more flexible method of raising capital. At the subsequent equity round, the note typically converts at the same valuation as new investments, adjusted by an agreed discount for early investors.

Need Help With Raising Capital?

Securing capital can expose your business to various risks, which is why having expert legal support is crucial. At Sprintlaw, our innovative startup lawyers are well-versed in the complexities of capital raising. From offering tailored legal advice to drafting impeccable agreements, we ensure you’re fully prepared for the funding journey ahead. We also offer specialised capital raising consultations and comprehensive capital raising packages designed for the demands of 2025. If you’re also revisiting your business structure, you might find our insights on choosing the right business structure invaluable.

With ongoing advancements in fintech and increased regulatory oversight, now is the perfect time to position your business for success. Embracing digital tools and ensuring your legal documentation is up to date can streamline the process and give you confidence when engaging with investors. For further reading on essential legal protection strategies, check out our related resources in our legal guides.

Contact us on 1800 730 617 to find out more. Whether you’re raising capital for the first time or looking to expand further, Sprintlaw is here to support your journey in 2025 and beyond.

Abinaja Yogarajah

Abinaja is a the legal operations lead at Sprintlaw. After completing a law degree and gaining experience in the technology industry, she has developed an interest in working in the intersection of law and tech.

Embeth Sadie

Embeth is a senior lawyer at Sprintlaw. Having previously practised at a commercial litigation firm, Embeth has a deep understanding of commercial law and how to identify the legal needs of businesses.