Say you have 100K$ Why start a business with all the risks involved over say buying 100K$ of Google stock? Say I open a coffee bar. I have to pay people, workers, suppliers under the table perhaps even. Maybe a coffee bar opens up in the same street. Maybe they start working severely limiting accessibility to my street and coffee house. Maybe the economic crisis deepens and people start cutting back even more. etc etc etc If you buy a stock, it could go up, or down. Say it turns sour you can still get out with a 10% loss, 20% loss, 30% loss... If you want to get out of a failed business project chances are you lose a lot more no. Why should and people often favour opening a business nevertheless?