African startups targeting $1 million pre-seed rounds risk losing investors, Sidebrief COO warns
By Aboki Forex —
Abdulwaheed Yusuf, co-founder and COO of Nigerian regtech startup Sidebrief, has warned African founders that announcing a $1 million pre-seed target when only $20,000 is committed can scare off investors. He spoke on a panel at GITEX Nigeria 2026 in Lagos.
Yusuf said founders need to align fundraising targets with the size of cheques they can realistically secure, especially in a first round. Announcing a large target early, before serious commitments are in hand, makes the raise harder, not easier.
What Yusuf said
Yusuf said one mistake founders make is advertising a big pre-seed target when their first investor commitment is much smaller. “I think the mistake people make… you say you’re raising one $1 million as a pre-seed. But your first cheque is probably $20k,” he said.
He argued that an investor who sees only $20,000 committed to a $1 million round will doubt the founder can close it. “How much you have committed? $20k? The investor is thinking there’s no way I’m reaching your goal,” he said.
His advice: focus on getting that first cheque. “The biggest metric… is getting that first check-in,” he said. Once one investor backs the startup, later conversations become easier because the risk looks lower to other backers.
Funding slowdown bites
The warning comes as African startup funding slows sharply in 2026. In the first seven months of the year, startups raised $1.46 billion, down 27% year-on-year from $2 billion in the same period of 2025.
July was especially weak. Startups raised just $102 million across 44 deals, 60% below the $258 million monthly average of the previous 12 months. Equity funding hit its lowest monthly level in more than seven years.
Nigeria is also feeling the squeeze. Startups in the country raised $78.6 million across 15 deals in the first quarter of 2026, down 28% from a year earlier. The top 10 startups accounted for almost 99% of that capital.
Fintech still dominant
Despite the tough market, fintech remains Nigeria’s leading sector for startup funding. It attracted $98.5 million across 21 deals in the first half of 2026, or 53.33% of the $184.7 million raised by Nigerian startups in the period, according to Nairametrics analysis.
For Nigerian founders, the lesson is clear. With investors becoming more selective, securing that first credible commitment matters more than chasing a headline funding figure. A realistic first cheque builds momentum, while an oversized target can stall the round before it starts.