An increasing number of people agree that it is becoming easier to start a business, but there are also more potential entrepreneurs that are deterred from doing so by the fear it might fail, according to the Global Entrepreneurship Monitor (GEM) 2024/2025 Global Report: Entrepreneurship Reality Check. Aileen Ionescu-Somers and Christian Friedl from GEM explain why this is so problematic and what can be done to create an environment where individuals feel confident in pursuing their business ideas.

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Entrepreneurship has long been celebrated as a driver of economic growth, innovation, and job creation. Yet, a troubling trend has emerged: more people around the world are holding back from starting businesses due to fear of failure. This is a common and potentially paralysing phenomenon when it affects entrepreneurs, due to several highly diverse factors.

According to the new Global Entrepreneurship Monitor (GEM) 2024/2025 Global Report: Entrepreneurship Reality Check, the percentage of individuals deterred from implementing their entrepreneurship ambitions due to fear of failure has risen from 44% in 2019 to 49% in 2024.

The data from the GEM report (based on responses from more than 150,000 individuals across 50+ economies) reveals a stark reality: even when individuals recognise good business opportunities, an increasing number hesitate to act. In 2019, 42% of those who saw viable opportunities refrained from starting a business due to fear of failure; by 2024, this number had grown to 47%.

In 2019, 34 out of 50 economies surveyed had at least 40% of opportunity-seekers citing fear of failure as a deterrent. By 2024, this figure had jumped to 43 out of 51 economies—an 84% increase. The trend is clear: across diverse economic landscapes, entrepreneurial ambition is being stifled by the fear of risk.

This growing apprehension is a significant challenge that policymakers, business leaders, and educators must address. The findings of the report underscore the need for robust support systems that can mitigate risk and encourage more people to turn their business aspirations into reality.

Why Fear of Failure Problematic

While caution in business is prudent, excessive fear of failure can suppress economic dynamism. Startups and small businesses are essential engines of job creation and innovation, and if fewer people take the entrepreneurial leap, economies may stagnate.

Several potential factors may be contributing to this phenomenon:

1. Financial risk and bankruptcy fears: In many countries, stringent bankruptcy laws impose severe personal consequences on failed business owners, discouraging individuals from taking entrepreneurial risks.
2. Uncertain economic conditions: The post-pandemic world has seen increased market volatility, rising interest rates, and inflationary pressures, all of which make starting a business riskier.
3. Cultural stigmas around failure: In some societies, failure is seen as a personal shortcoming rather than a learning experience, creating a psychological barrier to entrepreneurship.
4. Lack of support systems: Many aspiring entrepreneurs lack access to mentorship, training, and funding, making the risks feel insurmountable.

Disparities Across Economies

The GEM report highlights substantial variations in entrepreneurial intent across different regions. While some economies, such as Qatar and Jordan, see a majority of adults expecting to start a business in the next three years, others, including China and Poland, report very low entrepreneurial intent.

Interestingly, entrepreneurial intent tends to decline as a country’s income level rises. High-income economies often have more stable job markets, making entrepreneurship less appealing compared to traditional employment. Conversely, in lower-income economies, entrepreneurship is often a necessity rather than a choice, leading to higher participation despite fear of failure.

Addressing Fear of Failure

The findings of the GEM 2024/2025 Global Report serve as a wake-up call: more must be done to create an environment where individuals feel confident in pursuing their business ideas. A concerted effort is needed from governments, financial institutions, and educational organisations.

GEM research has underscored over the years that every entrepreneurial ecosystem is unique. What may work in one economy might not necessarily be the best solution in another. That disclaimer out of the way, possible actions to reverse the fear of failure trend could include the below.

1. Reforming bankruptcy laws:
Reducing the personal consequences of business failure—such as making bankruptcy laws less punitive—can help alleviate fears and encourage calculated risk-taking.

2. Increasing awareness of failure rates and risk management:
Many aspiring entrepreneurs overestimate their chances of failure. Educating people about realistic failure rates, risk mitigation strategies, and the iterative nature of business success can help reshape perspectives.

3. Strengthening entrepreneurial support systems
Robust networks that provide mentorship, funding, and training can dramatically improve an entrepreneur’s chances of success. To leverage this potential, governments and private-sector players can invest in accelerators, incubators, and small business support programmes.

Business education plays a crucial role within these systems by equipping entrepreneurs and aspiring leaders with strategic tools to mitigate risk, understand market dynamics, and apply lean startup methodologies. Through experiential learning, simulation, and case-based teaching, education also fosters resilience by normalising failure as a valuable learning process, thereby reducing its psychological burden and enhancing entrepreneurial confidence.

4. Highlighting resilience and success stories
More visibility can be given to entrepreneurs who have overcome failures to eventually build successful businesses. Normalising failure as part of the entrepreneurial journey – and indeed, often as a necessary prerequisite to successful entrepreneurship – can change cultural perceptions and inspire more people to take the plunge.

5. Providing financial safety nets
Governments and financial institutions can explore innovative ways to de-risk entrepreneurship, such as offering loan guarantees, microfinance options, or startup grants that provide a buffer against failure.

By reforming policies, improving support structures, and shifting cultural attitudes around failure, we can empower more entrepreneurs to take risks, innovate, and contribute to a thriving global economy. Our world is thirsty for entrepreneurial solutions to formidable 21st century challenges. The time to act is now.

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GEM is the only global research source that collects data on entrepreneurship directly from individual entrepreneurs. Many GEM National Teams are associated with top business schools in different countries. By forming a GEM National Team, your university, business school or research institute can position itself as the leading hub for entrepreneurship research in your country, attracting students, enhancing its reputation, and contributing to global thought leadership. Learn more at www.gemconsortium.org.