Sustaining entrepreneurship in ‘unsustainable’ communities: informal investment rates in England across the business cycle

This study examines the effect of community deprivation and the economic cycle on the distribution of informal investments across communities in England. The results suggest that informal funds may be the only accessible source in the most deprived areas, while in the least deprived areas they may be a function of higher rates of successful start-ups. The research highlights the role of local conditions which generate various opportunities and bring about different outcomes. This issue is particularly topical given the current UK government’s aim of devolving local economic development powers to local communities rather than central government, which was signaled by its Localism Bill in 2010. This research demonstrates the critical role that informal investment makes in the most deprived communities. Without it, entrepreneurship would struggle to survive in these communities in times of recession.