New Delhi [India], June 23: Most Indian startups do not fail because their ideas lack potential. Many fail because they run out of money. For early-stage founders, a significant share of precious capital can disappear before the first customer pays—locked into office rent, large security deposits, and long-term lease commitments.
Around 90 per cent of Indian startups shut down within their first five years, with cash shortages frequently cited among the leading causes of failure. Government data presented before the Lok Sabha shows that more than 6,300 startups recognised under the Startup India programme had shut down by October 2025. Maharashtra recorded the highest number of closures at 1,200, followed by Karnataka with 845 and Delhi with 737.
For founders who carefully plan an 18-to-24-month runway, high fixed costs can quickly change the equation. A business expecting nearly two years of operating flexibility may find its available runway shrinking to just 9 to 12 months as recurring expenses and upfront commitments consume working capital.
Office space is often one of the earliest and largest expenses—and the money can start leaving the business before a single rupee of revenue comes in.
Consider a small startup team in Delhi. Average office rent in the city is around ₹110 per square foot per month. A modest 1,000-square-foot office could therefore cost approximately ₹1.1 lakh every month.
The rent itself is only part of the financial burden. Commercial landlords in India commonly require security deposits equivalent to two to six months of rent upfront, while deposits in major metropolitan markets can rise even higher. At six months’ rent, a founder could have ₹6.6 lakh locked away in a landlord’s account before factoring in monthly rent, interiors, utilities, maintenance, and other operational expenses.
That capital generates no immediate return for the startup. It generally remains inaccessible until the lease ends and the deposit is refunded, subject to contractual terms. For an early-stage company, such a commitment can significantly reduce the money available for product development, hiring, customer acquisition, technology, and day-to-day survival.
This is where the virtual office model is changing the economics of business infrastructure.
A virtual office can provide founders with a professional business address suitable for eligible business and GST-related requirements, along with access to physical meeting spaces, without the financial burden of maintaining a full-time office. By reducing large upfront deposits and recurring rental commitments, startups can preserve more capital for areas directly linked to growth.
“We kept meeting founders who had done everything right and still ran out of road,” said Ankur Goel, Founder of Address.co. “When we looked closely, a painful amount of their money was just sitting in a deposit, or going out as rent every month for an office that stayed half empty. That capital belongs in the business. Our goal is simple. We want a million Indian founders to keep it there, so they can keep building.”
For Address.co, the proposition extends beyond a single service. The company aims to influence how Indian entrepreneurs think about the very idea of having an office.
For decades, a physical workplace was often viewed as proof that a business was established, credible, and serious. Address.co is betting that the next generation of founders will measure business credibility differently—not by how much a company spends on office space, but by how intelligently it deploys capital.
This shift is particularly relevant as startup teams increasingly embrace remote work, hybrid operations, distributed hiring, and flexible infrastructure. For businesses that do not require employees to occupy a permanent office every day, committing substantial working capital to rent and deposits can create unnecessary financial pressure.
For founders currently deciding whether to sign a conventional commercial lease, the company’s message is straightforward: Keep the deposit. Build the business.
Address.co said it will share further details in the coming months about how it plans to advance its long-term goal toward 2040.
About Address.co
Address.co is one of India’s largest virtual office providers, trusted by more than 22,000 businesses seeking professional, GST-valid business addresses without paying for physical office space they may not need.
Its customers range from first-time founders to established names such as Swiggy, HTC, and Saregama. According to the company, businesses using its services have collectively kept more than ₹650 crore in working capital out of office rent and security deposits, allowing that money to remain within their businesses instead.
Sources
Data on startup closures—including more than 6,300 recognised startups shutting down by October 31, 2025, with Maharashtra, Karnataka, and Delhi recording the highest numbers—was sourced from Government of India information shared by the Ministry of Commerce in a written reply in the Lok Sabha, including the state-wise figures provided in Annexure I.
The estimate that around 90 per cent of startups fail, with cash shortages among the commonly cited reasons, references startup failure and post-mortem research associated with CB Insights.
Information regarding commercial security deposits references the Model Tenancy Act, 2021, which provides for limits on commercial tenancy security deposits, alongside reported market practices in major Indian metropolitan cities.
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