Investing in Deprived Communities

Big Issue Invest (the social investment arm of the The Big Issue) carried out social impact research on behalf of Enterprise Ventures, a venture capital firm that provides loans and finance to small businesses in England and Wales. Working with research consultancy Geoeconomics, Big Issue Invest created a social value tool to assess venture capital projects according to the goal of supporting ‘a balanced economy’, creating a total score out of five equally weighted aspects: 1. Investment in the Recession, 2. Investment in SME growth, 3. Investment in Priority Sectors, 4. Investment in the Regions, 5. Investment in Deprived Areas.

‘Investment in Deprived Areas’ consists of investment in the 20% most deprived areas and in areas where the local unemployment rate is higher than the national average. The research found that Enterprise Ventures was investing in deprived areas as “Nearly 60% of all Enterprise Ventures investees are located in the 20% most deprived areas of England, compared to 23% of all SMEs.”

This is an interesting use of IMD to assess the social impact of a venture capital firm. The fact that the research was undertaken by a social investment group working with a data consultancy on behalf of a venture capital fund is also a good snapshot of the breadth of different users of IMD. Big Issue Invest seek to promote their scoring technique for use as a standard ‘social value assessment’ across the industry. Read their report here.