To answer your question, let's look at how this equation can be derived.
Say, at some time $t$, there are $N(t)$ nuclei. Let $p_t(Δt)$ be the probability that any one nucleus has not decayed (this probability is assumed to be the same for all nuclei) after an additional time $Δt$.
If we also assume that there are a lot of nuclei (this is important), we can say that at time $t+Δt$, there are $N(t+Δt) = p_t(Δt)·N(t)$ left (cf. the law of large numbers).
Rearranging this equation, we get $\frac{N(t+Δt)-N(t)}{Δt} = \frac{p_t(Δt)-1}{Δt}N(t)$.
It is reasonable to assume that the probability of a single particle not decaying is continuous and time independent (that is, if we change our time interval $Δt$, $p_t(Δt)$ will not "jump", and the probability for a fixed time interval will not change with time, which means $p_{t_1}(Δt) = p_{t_2}(Δt)$). Also $P_t(0) = 1$ obviously.
Now let's treat N as a continuous function (this is important as well) and let $Δt→0$. Then:
$\frac{dN(t)}{dt} = \lim_{Δt→0} \frac{N(t+Δt)-N(t)}{Δt} = \lim_{Δt→0} \frac{p_t(Δt) - 1}{Δt} N(t) = \frac{dP_t}{dt} N(t) =: -λN(t)$.
(We also assumed that $N$ and $p_t$ is differentiable.)
This equation is a differential equation for N(t). It has the solution $N(t) = N(0) e^{-λt}$.
Now, let's review this derivation:
To get this equation, we assumed N to be large so that the law of large numbers applies. We also assumed N to be a continuous function instead of a discrete one. This is obviously not true, because there can be no, say $\sqrt{2}$, nuclei. However, this is not a serious problem, because we assumed N to be large: If N is large, we cannot count the number of nuclei exactly anyway, so a small error is acceptable, because the result still gives a very good approximation. So no, this equation does not hold for small N, especially not for N(0) = 1.