What Series A Investors Want in 2026

SDS 073: What Series A Investors Want in 2026

Hey! thank you for reading issue 073 of Startup Definition Sunday (SDS). You can read past issues here.

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Now to Today’s Issue

A month ago, I shared the three pillars that separate seed-stage startups that thrive from those that stall. That conversation sparked meaningful discussions, and some of you reached out to share your takeaways. Today, I want to expand on that foundation by looking ahead to your Series A journey, specifically for startups in Africa expecting to raise Series A in 2026.

The Series A landscape is evolving, with new benchmarks shaping investor expectations. Whether you're laying the groundwork now or actively planning your next raise, here are three critical things to expect:

1. ARR Expectations Are Higher Than Ever

Gone are the days when $1M in Annual Recurring Revenue (ARR) could confidently land you a Series A. What was once the finish line for seed-stage companies is now the starting line. By 2026, Series A investors in Africa will expect to see ARR in the range of $3M–$5M.

This shift reflects increased competition and investor appetite for startups with proven scalability. As you build your revenue engine, focus on hitting these benchmarks early, while maintaining efficiency.

Actionable Insight: Set quarterly revenue milestones that ladder up to this ARR range. Celebrate the small wins but always keep the $3M–$5M ARR goal in sight.

2. Valuation Expectations Will Be Compressed

While higher ARR targets are the norm, valuations are trending in the opposite direction. Expect Series A valuations to be grounded in public market comparables, adjusted with an emerging market risk discount of 20%–35%.

Critically, public market multiples are under pressure, and this trickles down to private market valuations. As a founder, it’s critical to manage your expectations and ensure you’re prepared to justify every dollar of the valuation you’re targeting.

Actionable Insight: Study public companies in your sector. Understand their multiples and be ready to explain how your business aligns or outperforms on metrics like growth, margins, and retention.

3. The Quality of Your Revenue Is Key

ARR is just the entry ticket. Investors will scrutinize the quality of your revenue as much as the quantity. Two key metrics to prioritize:

• LTV/CAC Ratio: This should be above 3x for your customer profiles. A healthy ratio signals that your customers are not just acquired efficiently but are also sticking around long enough to generate meaningful value.

• Retention Metrics: Churn is a silent killer for startups. High retention rates are a testament to product-market fit and the strength of your customer relationships.

Actionable Insight: Conduct a deep dive into your LTV/CAC and retention metrics. Identify weak spots and refine your go-to-market strategy or product offering to address them.

My Two Pesewas

Series A fundraising in Africa in 2026 will be about more than just hitting revenue numbers. It’s about proving scalability, efficiency, and resilience in a market where expectations are increasing. I'll leave you with this: the bar may be rising, but so is the opportunity to stand out. Prepare intentionally, and you’ll be ready to meet the moment.

Share this newsletter with fellow founders who are also preparing to raise their Series A. Let’s ensure more founders are equipped with the insights they need to thrive.

That's all for today. As always, thank you for being an engaged reader. Let me know your thoughts on this issue.

Until next time,

Jasiel

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