Gen Z entrepreneurs have every opportunity and one big problem: fear of failure

If you are young and ambitious, it’s the best of times and the worst of times to be an entrepreneur. It’s great because the idea of being an entrepreneur has never been more alluring—and accepted. Taking control of your financial destiny by becoming an entrepreneur is an attractive prospect for young people.

Entrepreneurs are the most in-demand guests on podcasts, dispensing their wisdom, if they are not hosting them themselves. There’s no shortage of influencer role models. No wonder so many aspire to it.

But it’s also a particular struggle for Gen Z because they are saddled with an acute anxiety about failure.

This can be directly traced to the fact that, according to many experts, this generation was the first to go through adolescence while exposed to social media on their smartphones. (Just ask Meta if this is an issue, having agreed to a payout of up to $17 billion to states who alleged its platforms harmed children).

Why is this a problem for the entrepreneurial culture? Would-be entrepreneurs need to be very mentally robust when it comes to dealing with failure, which is 90 percent of the business journey, even for a founder who is ultimately successful. The dream being sold to Gen Z online can be completely at odds with the reality of achieving it.

The Allure of the Influencer

It’s never been easier to register a company, set up a retail system through services like Shopify or sort payment through tools like PayPal, Stripe or Square. You can easily experiment with viral marketing through platforms like Instagram and TikTok to find new customers, filming adverts on your phones, or building online flyers with Canva or Picsart.

AI is now accelerating this trend further, making it easier to create apps without any coding talent. It can also act as an adviser, helping you to navigate complex issues like health and safety regulations and compliance. Like I say, it’s the best of times.

There are thousands of entrepreneurs on social media happily shouting: “Look at me, I’ve done it, be like me and you can do it too.” Indeed, being a creator on social media is one of the most popular ways to slip into entrepreneurship, building a following through your personal passion to create a customer base. The process feels natural to many who have watched influencers since early childhood.

The number of U.K. professionals adding “Founder” to their LinkedIn profile rose by 69 percent in 2025. The figure has more than doubled since 2022 (and outpaces the global average of 60 percent).

For Gen Z (and coming soon, Gen A), it’s one of the top life choices. According to a report by Block and Public First in December 2025, 67 percent of 18-34-year-olds say they are considering starting a business.

All this sounds like very good news for our stuttering economy that is struggling to provide entry-level jobs for young people, thanks to AI. But there’s a problem.

We Have a Failure to Deal With Failure

As a business journalist focusing on entrepreneurship for the past 15 years, there’s something I’ve learned from speaking to hundreds of entrepreneurs. To succeed in entrepreneurship you have to be emotionally and psychologically primed to deal with failure on an ongoing basis.

This is the message I consistently pick up on those occasions when I get to spend a good amount of time with them and can gain their confidence. Even the most successful are clearly scarred by the experience of failure and say it defines the majority of the business journey.

Typically, more than half of all new businesses fail in their first five years. That’s one obvious reason you must be ready for failure. But even when you are building a successful business, you are dealing with failures for much of your time.

The best entrepreneurs, in my experience, have developed the psychological resolve to process failure in a smart way, rather than ignore it. Moreover, they have developed a muscle that allows them to confront failure and talk openly about it in order to root out problems in their business. This skill doesn’t come naturally to most.

The Global Entrepreneurship Monitor has been measuring support for entrepreneurs, breaking it down on a national level and compiling an annual report, for nearly 25 years. In its 2025 report, it surveyed 51 countries and found that “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.”

Between 2019 and 2024, the number of economies across the world in which at least 40 percent of people seeing good opportunities would not start a business for fear it might fail increased markedly, from 68 percent to 84 percent.

Fear of failure is a major blocker for would-be entrepreneurs. And while Gen Z may be one of the keenest to start their own businesses, there has never been a generation more petrified of failure.

It’s the Phone, Stupid

As Jonathan Haidt has argued in The Anxious Generation, Gen Z has been the first to experience a “phone-based childhood” and the first to “go through puberty with toxic social media…a firehouse of addictive content.” This was the generation hit by the introduction of the “like” button (2009) and the front-facing camera (2010).

Through adolescence, Gen Z has been immersed in virtual communities with low barriers to exit and entry, as opposed to learning social skills in person through play, where you learn compromise, tolerance of difference and self-composure in the face of failure. That’s why we are starting to see traits like an inability to look people in the eye. Or one I’ve witnessed myself recently: a reluctance to ring a doorbell for fear of speaking to a new person face-to-face.

One issue I hear a lot is that leaders are having to change the way they interact with Gen Z recruits, because they are very sensitive to criticism. They respond badly to personal feedback when delivered in the usual way, becoming automatically defensive.

It’s not surprising. This is the generation raised in the general chat on WhatsApp and incessant posts shared by peers on Instagram, TikTok and Snapchat. In adolescence, you are highly sensitive to peer pressure and potential shaming as you form your identity. In this new virtual world, your position in the group is always-on and clear for all to see. Criticism can mean instant ostracism. One wrong move cannot only be seen by the whole group and make you an outcast, it can potentially be shared more widely on social networks for mass ridicule. It’s hard to switch off from this matrix in your pocket that’s constantly judging you.

Fear of failure and the social stigma it brings are natural. But social media has created a hothouse that has made young people hypersensitive to failure. This was always going to a problem for many budding entrepreneurs.

The World Is Open for Business: Don’t Let Fear Stop You

A new cohort of all ages may have to embrace entrepreneurialism as AI advances reduce white-collar headcounts. We may see a vast increase in the number of enterprises in the business world, even if they are much leaner, with humans working alongside autonomous AI agents. We will also likely see more individuals (including journalists like me) leaving employment with large organizations to set themselves up as creator entrepreneurs, using platforms like Substack, Fiverr and Patreon.

Everyone will have to overcome their fear of failure and become more entrepreneurial. The technology is there to make it easier for everyone. But it’s Gen Z and the youth that follow that will face the greatest challenge, which is psychological. They will have to overcome the fear of failure that the very same advances in technology have instilled in them.

Dougal Shaw is Senior Correspondent at Business Leader in the U.K. His latest book is Fail Smarter, published by Profile Books.