That's why many universities declare in their charter that research doesn't have to be practical. The practicality of RSA asymmetric encryption only became practical with the advent of the internet ;)
No, universities do that because it's limiting to only focus on practical science, not because scientists are afraid to fail. Theoretical breakthroughs often find their use in practice with time.
Fear of failure is because we only put money on success, so researchers' livelihood, dignity and prestige depend on their research bearing fruit.