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Suppose you spend your time and energy focussing on building a startup and suppose you get unlucky and your startup ends up in dust. Will the investor/industry forgive you? What is the life after the bust? Can you get a job? Do people look upon them as untouchables or unlucky mascot?

Is this fear keeping people out from venturing in?

Yes. Yes. Yes. No. Varies.
Go read Pauls essays. He covers aspects like this from his own experiences and those of groups he's funded.

Generally the theme is "Its better to have tried and failed than to have never tried at all". Many employers (at good companies at least) will see someone who attempted to start a company as a person with good leadership skills and a strong work ethic. If anything this could help you get a job. Thats of course assuming you didnt do something stupid like drop out of school first.

Also, you can learn much through a failure. Look at the Justin.tv guys. They knew what it took to be successful the second time around by learning from their mistakes with kiko. Now they are totally rocking it.

I know that pal, i was trying to highlight the fact that "the fear of failure itself is the greatest fear". I was just curious to know what kind of reactions i may get.