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Why Explainer Videos Are Essential for Startup Success Explainer videos are essential tools for startups seeking seed funding. Explainer videos improve understanding, showcase the product's USP, demonstrate market potential, build credibility and trust, and offer a competitive advantage.

By Vikas Agrawal Edited by Micah Zimmerman

Opinions expressed by Entrepreneur contributors are their own.

Explainer videos are one of the most potent tools that startups can use to secure seed funding.

What? Yes. Explainer videos have emerged from just being marketing material. Do you know that most video game, online card game and board game companies use explainer videos dedicatedly to raise funds?

Why?

Explainer videos have the magic to deliver the in-person game-playing experience to the investors(as well as customers), where they can visually understand the addictive factor and the 'can-go-viral' side of the games.

Ok. You may have already seen those emotional explainer videos where NGOs explain their charitable side, their entire workflow and the impact it's driving. Those videos wow everyone, especially the donors. Similarly, your potential investors just want to understand some of the simple attributes of your product or service.

Related: How to Start Using Explainer Videos (Infographic)

Is there a real demand for your product? Is it market fit? Can it turn more heads gradually? Is there an X-factor that sets your product apart from its competition?

And, the best way to explain all these? A well-designed explainer video, hands down.

Statistically, around 59% of senior executives, veterans and tech pundits who make the major decisions prefer explainer videos to any other form of content that explains a business model.

That's where explainer videos come into the seed funding scenario

Firstly, explainer videos have become an essential tool for startups seeking seed funding. They provide a visually appealing and easy-to-understand overview of a company's product or service and allow investors to grasp the business's potential quickly.

Secondly, the use of animation, graphics, and narration in explainer videos makes complex ideas simple and appealing, which can help startups stand out from the competition and effectively communicate their unique value proposition.

Furthermore, explainer videos can demonstrate a company's ability to effectively market its product and show its understanding of its target audience. In today's fast-paced and highly competitive startup ecosystem, explainer videos are a must-have tool for startups looking to secure seed funding.

Related: The Secrets to Making an Explainer Video Stand Out

Importance of explainer videos in seed funding

Explainer videos are now a vital part of entrepreneurs' early funding procedures. They support the clear, concise and aesthetically appealing communication of the concept underlying the good or service.

The videos act as a primer for potential investors, helping them to comprehend the value proposition and growth potential immediately. Additionally, they allow entrepreneurs to distinguish themselves from the competition and gain investors' trust by showcasing their creativity and storytelling abilities.

Additionally, explainer videos promote a startup's passion and energy, which makes it simpler to get seed funding and draw in potential investors.

So, how does a strong explainer video helps you to get seed funding in the cutthroat startup environment of today? This is how:

  • Improve understanding of the business concept.
  • Showcase your product's USP.
  • Demonstrate market potential.
  • Build credibility and trust.
  • Harness a Competitive Advantage.

How to create effective explainer videos for funding

Focus on these fundamental factors:

  • Clear messaging: The video should clearly communicate the problem that the startup is trying to solve and how their product or service solves it.
  • Simple visuals: The visuals should be simple, visually appealing and easy to understand, even for those with little prior knowledge of the industry.
  • Engaging narration: The narration should be engaging, clear, concise and effectively convey the video's key messages.
  • Highlighting Unique Value Proposition (UVP): The video should highlight the startups' unique value proposition and explain why their product or service differs from what's already available in the market.
  • Demonstrating proof of concept: The video should demonstrate the proof of concept, showing how the product or service works and its potential impact.
  • Showcasing the team: The video should showcase the startup's team and their expertise, highlighting their ability to execute their business plan.
  • Short length: The video should be short, ideally under 2 minutes, and straight to the point to hold the viewer's attention.
  • Professional quality: The video should have good lighting, sound, and animation to look polished and professional.

Related: How Your Business Can Make Professional-Grade Videos on a Bootstrapped Budget

Real-world examples of startups that used explainer videos

Dropbox: The popular file-sharing and storage company used an animated explainer video to effectively communicate their business idea and secure seed funding from investors. The video, which has been viewed over 20 million times, provided a simple and engaging way for Dropbox to demonstrate the value of its product.

Airbnb: Airbnb used an explainer video to help secure seed funding for their business. The video highlighted traditional travel accommodations' pain points and how Airbnb solved these problems with its unique platform. The video effectively communicated the company's value proposition and helped secure seed funding from investors.

Square: Square, the mobile payment company, used an animated explainer video to effectively communicate their business idea and secure seed funding from investors. The video provided a simple and engaging way for Square to demonstrate the value of its product and helped secure seed funding from investors.

Slack: Slack, a team communication platform, used explainer videos to demonstrate its product's benefits and attract potential investors. The videos effectively communicated Slack's unique value proposition and helped simplify the complex concept of workplace communication and collaboration.

Last words

Lastly, explainer videos are clearly essential for startups seeking seed funding. They humanize your branding and enable you to foster the human-like communication effect that influences your potential investors.

They also allow startups to showcase their creativity, storytelling skills and vision for the future. By incorporating an explainer video into the seed funding process, startups can greatly increase their chances of securing funding and setting the stage for long-term success.

Vikas Agrawal

CEO of Infobrandz.com

Vikas Agrawal is a Strategic Marketing Consultant, and Crypto Advocate. With a passion for visual marketing and branding, data privacy and emerging technologies, Vikas leads Infobrandz.com and empowers companies to thrive in the digital era.

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