Dr Anbu Selvi S

Entrepreneurial Biases and Resilience: Building Sustainable Start-Ups Entrepreneurial Biases and Resilience: Building Sustainable Start-Ups Dr Anbu Selvi S September 29, 2025 Youth Entrepreneurship Resilience is the ability of a business to withstand, adapt, and thrive in the face of shocks that are internal and external, as well as known and unanticipated. (Pixabay) India’s Growing Start-up Ecosystem Entrepreneurship has reemerged as one of the foremost drivers of economic growth in India during the 21st Century. With nearly 1.92 lakhs recognized start-ups and a rapidly expanding community of young innovators, India now stands as the world’s third-largest start-up ecosystem. This growth has been fostered by government initiatives designed to nurture entrepreneurial skills and resilience from the grassroots to higher education. Programmes like the School Innovation Development Programme (SIDP) encourage creativity and problem-solving among young learners, while Innovation and Incubation Centers (IICs) at universities and colleges provide critical platforms for transforming ideas into viable ventures through mentorship and industry connections. These efforts have laid the foundation for a dynamic entrepreneurial culture capable of driving progress across diverse sectors such as technology, healthcare, and agriculture. The Psychological Journey of Entrepreneurship However, entrepreneurship is not simply a matter of having the right idea or sufficient capital. It is a profoundly psychological journey fraught with uncertainty, volatility, and social pressures. Research shows that many promising start-ups fail not because of a lack of innovation or resources but due to cognitive and psychological biases that distort how entrepreneurs assess risks, make decisions, and respond to failures. Recognizing and managing these biases is essential to fostering resilience, i.e., the capacity to adapt, recover, and sustain momentum despite setbacks.  Biases Across the Entrepreneurial Lifecycle  Entrepreneurs are subject to different biases throughout the lifecycle of their ventures. Before launching, many face pre-entry biases such as fear of failure, doubts about their readiness, or an overemphasis on resource scarcity, which discourage participation in entrepreneurial activities. During the execution phase, overconfidence and distorted optimism often lead founders to overlook risks or ignore warning signs. When ventures fail, entrepreneurs may succumb to stigma, regret, or pessimism, preventing them from learning from their experiences and trying again. Even after success, biases such as complacency and social pressure to scale quickly can jeopardize long-term sustainability.  The Complexities of Entrepreneurship in the Digital Era  In today’s digital era, entrepreneurship is both empowered and complicated by technology. Digital platforms provide unprecedented access to markets and resources, but also amplify biases such as herd mentality and fear of missing out (FOMO). Social media algorithms often reinforce confirmation biases by highlighting positive signals while filtering out critical feedback, leading entrepreneurs to overvalue hype and short-term growth. High-profile cases of rapid valuation collapses among unicorns like Byju’s illustrate the dangers of prioritizing scale over sustainability. Hence, critical digital literacy becomes a vital skill, enabling entrepreneurs to discern between genuine opportunities and transient trends, and to build ventures that endure beyond viral success.  The Case Studies of Post-Failure Biases To understand how psychological biases shape entrepreneurial resilience after failure, the following real-life case narratives offer concrete insights. These examples reveal how entrepreneurs internalise setbacks and develop specific cognitive distortions that influence their future decisions and behaviours. Case Study-One: an entrepreneur who faced repeated failures in multiple small ventures during the early 1990s, illustrates self-attribution bias and regret aversion. Despite eventually achieving long-term success in the media industry (cable television), in his early losses led to deep-seated self-doubt and a tendency to attribute success to luck rather than skills. This also resulted in status quo bias and pessimism bias, making him overly cautious about new opportunities. Case Study-Two: a textile trader, experienced betrayal aversion after being deceived by a co-founder who embezzled funds. Though he recovered financially with a new garment business, his outlook became defined by confirmation bias and generalization bias, where mistrust toward one partner extended to all future collaborators. His heightened protective instincts also led to overcompensation bias, creating rigid systems that stifled flexibility and growth. Case Study Three: a garment exporter in Tiruppur, represents the psychological toll of external shocks like the COVID-19 pandemic. His experience highlights normalcy bias, optimism bias, and illusion of control, as he underestimated the long-term impact of the pandemic and overestimated his ability to manage macroeconomic forces. Even as his business began recovering, complacency bias returned, leaving him vulnerable to future disruptions. These narratives underscore that entrepreneurial failure is not merely a financial even, as it becomes a deeply psychological experience. The nature of the failure, be it self-inflicted, relational, or circumstantial, shapes the type of bias that may emerge. Recognizing these patterns is crucial for designing interventions that help entrepreneurs rebuild not just their ventures, but also their confidence, mindset, and decision-making frameworks. Policy Interventions for Resilience and Sustainability: The following recommendations may be adopted in the higher educational institutions to foster: Pre-Entry Support: Role-model campaigns (e.g., showcasing women like Falguni Nayar of Nykaa), micro-seeding grants, and student innovation programmes to reduce fear and stigma. Resilience Training: Embedding coping strategies, mindfulness, and reflective practices in incubation curricula. Post-Failure Support: Second-chance finance (like Mudra loans), peer-support clinics, and counseling networks. Post-Success Awareness: Structured mentorship for scaling responsibly, preventing overconfidence traps. Inclusive Ecosystems: Gender-sensitive incubators (such as Her&Now by GIZ), rural accelerators, and equitable policy support. Well-Being Support: On-campus psychologists and behavioural mentors in IICs. Ethics and Sustainability: Embedding Environmental, Social, and Governance (ESG) and case studies of responsible start-ups like SELCO Solar (affordable renewable energy for rural India). Conclusion Entrepreneurship is as much a psychological journey as it is a financial and technical one. Biases, if unmanaged, distort decision-making and weaken resilience. By embedding resilience training, ethical awareness, and mental well-being support into education and incubation systems, India can create entrepreneurs who adapt and innovate. Normalising failure (as in Paytm’s founder’s journey), celebrating sustainable models (like SELCO and Phool), and institutionalising second-chance mechanisms will empower entrepreneurs to take risks in healthier and more sustainable ways. Ultimately, the entrepreneurs who will build enduring ventures are not those who avoid bias or failure, but