Public markets are down. The New York Nasdaq, which contains many of the most renowned U.S. tech stocks, has fallen by more than 25 percent this year. European tech companies have been hit hard, too. Year to date, Just Eat and Deliveroo have lost around 60 percent of their market cap.

In response, many of the formerly hyped high-growth companies are trying to decrease cash burn and are cutting staff. Berlin-based Gorillas, which raised nearly $1 billion only a few months ago, just recently announced it would be laying off some 300 employees. Lime announced it would lay off 13 percent of its staff.

In this tech rout, late-stage investors like Tiger Global and SoftBank, which have a reputation for also backing blitzscalers pursuing unproved business models, lost billions. Tiger Global was hit by a $17 billion loss and SoftBank by a $26 billion loss. Their investment strategies have always been questioned by industry veterans who suspected many of the blitzscaling portfolio companies would never become profitable. Now, these late-stage investors, which poured billions into blitzscalers, are put under even more scrutiny by their own investors and are slowing down their investment pace.

As these late-stage investors are slowing down their investment pace, early-stage investors do also face difficulties finding follow-on investors for their blitzscaling portfolio companies. The impact trickles down from late-stage to seed-stage. What does this mean for you as a founder? Is blitzscaling dead? What is the right growth strategy for you?

Blitzscaling is not dead. It is not dead for the following reasons:

1. Blitzscaling remains a valid growth strategy for companies that must win against strong competition in large winner-take-all markets. In these markets, companies that face strong competition must prioritize speed over efficiency to capture market share and stay ahead of the pack. For instance, the founders of Airbnb, Dropbox, LinkedIn, PayPal, Slack, Spotify, and Stripe have successfully applied this highly aggressive growth strategy. But blitzscaling is by no means the right strategy for each and every founder. The contrary is true. Reid Hoffman and Chris Yeh, the authors of Blitzscaling, emphasize that blitzscaling means disregarding many of the normal rules of business and comes with an abnormally high risk of failure. They make it loud and clear that it makes sense to blitzscale only if speed into the market is the critical strategy to achieve massive outcomes.

2. According to Preqin, venture capital firms have amassed almost $500 billion in dry powder only this year. This money must be deployed. And I have no reason to believe that it will not be deployed at promising startups that blitzscale to dominate huge markets.

3. Venture capital fund returns are characterized by the power law, according to which only a small number of investments will generate the majority of the fund returns. For a venture capital fund portfolio to succeed, investors must focus on finding these very few companies that will be standout performers. As the above examples of successful blitzscalers demonstrate, companies that successfully blitzscale can become such standout performers. They will be sought after also going forward.

But -- and this is a big but -- given the overall macroeconomic environment, the war in Ukraine, high inflation, increasing interest rates, a potential economic downturn, and the tech rout, venture capital investors have already become more selective and reluctant to invest in high-growth companies that blitzscale and pursue unproved business models. My insights and discussions in the industry ecosystem indicate the investment focus has shifted from hypergrowth companies to companies that grow both fast and efficiently.

For you as a founder, this means the following:

1. Unless you target a huge winner-take-all market, and unless the market dynamics require you to prioritize speed over efficiency, you should not blitzscale. Instead you should fastscale.

2. If you fastscale, you first validate the business model and then accelerate growth based on a solid high-growth foundation determined by a large target market, product-market fit, product-channel fit, strong unit economics, and a scalable technology infrastructure.

Fastscaling is more cash-efficient, comes with less funding need, and correspondingly entails less dilution of your founder shareholding. If you fastscale, it may take you a bit longer, but the probability you can raise money in the current situation and ultimately succeed building a massively valuable business is significantly higher.