We’re not scared of monsters under the bed, but us Brits do have one irrational fear: failure.

Fear of taking risks in business is a spectre holding back British tech startups. Like imaginary creatures living under your mattress, failure is nothing to fear – and being afraid to take risks gives the US an opportunity to continue widening the gulf in its tech leadership. It’s time to stop resisting risk and embrace it. Without it, there’ll be no rewards.

Forget the Silicon Roundabout, Tech Nation or Hackers’ Hackney (yes, I made that last one up). No matter what you call the UK tech startup community, it will continue to lag behind Silicon Valley. We can compete in talent. We can compete in ideas. We’re building infrastructure – better cable and human networks – and have money flowing in.

Yet we’re falling behind. Here’s why.

We can build a community and infrastructure that mimics Silicon Valley but, without the psyche of the American West Coast, it’s doomed to fall short. Building a startup community is hard to replicate because it’s not just a structural or physical place. It’s also not quite a religion, but nor is it far off from being one.

I’ve spent a lot of time in the US. My experience is that part of their culture is that people want to live the American Dream and are willing to take risks to get it. It’s embedded into their psyche that reward comes from risk.

That’s even more the case in California. Silicon Valley is home to wealthy innovators who take pride in reinvesting their capital in technology. They risk their self-made money to help someone get on in life and give back to the community.

But now, at the height of the technological revolution, we’re holding backThe UK has a rich history of entrepreneurship, but we’ve simply lost our way – or maybe even our nerve. Look at the Industrial Revolution: James Watt and James Hargreaves were innovators and entrepreneurs who had big ideas. They probably had a few heart-stopping moments and suffered real failures, but what we remember are their achievements with steam engines and the spinning jenny, not the ins and outs of their business dealings or the days when everything didn’t quite come together. But now, at the height of the technological revolution, we’re holding back.

If we change our attitudes towards risk and failure, the struggling economy might help kick-start a new generation of innovators. Having a job for life isn’t an option anymore and it’s easy to find yourself self-employed, regardless of your industry. So, why not work for yourself? There are more risks, but the rewards are all yours.

But that’s only the skills side. We also need a change in attitudes towards funding. It’s nigh on impossible to transform a startup into a multibillion-pound tech giant without help. Investors need to realise that a failed business isn’t a failed idea, and that a struggling startup might simply need a quick boost to turn into a top-notch business. Investors must give startup founders the support, funding and confidence they deserve.

Most entrepreneurs don’t succeed with their first business – it takes a few attempts to strike goldMost businesses don’t work out. But, without taking a risk, none of them will. If your startup fails, it doesn’t mean you’re a failure. Get back up and start another one. Most entrepreneurs don’t succeed with their first business – it takes a few attempts to strike gold. That’s the idea behind failing fast: don’t be afraid to fail and don’t drag out your failures by trying to force them to succeed.

In the US, investors think “if I invest a million dollars and get it back, that’s not bad.” Here in Britain, we think “if I invest a million pounds and lose a single one, it’s a failure.” It’s risk aversion akin to never getting out of your bed for fear of the monster underneath it. It’s time to grow up Britain and stop being afraid of failure.

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Piers Linney is co-CEO of cloud experts Outsourcery, a former investor on BBC’s Dragons’ Den and a future Virgin Galactic astronaut. He is also trustee of Nesta, an innovation charity with a mission to help people and organisations bring great ideas to life.