Crowdfunding is a method of raising external finance by collecting small amounts from a large audience, rather than from a small group of sophisticated investors. This paper develops a model that links crowdfunding with pre-ordering and price discrimination, and examines the conditions under which crowdfunding is preferred to traditional forms of external funding. The model shows that crowdfunding can offer an enhanced experience to some consumers, allowing the entrepreneur to practice second-degree price discrimination and extract a larger share of the consumer surplus. However, the entrepreneur is constrained in their pricing choices by the amount of capital needed to raise, which can reduce profitability. The paper discusses the advantages and disadvantages of crowdfunding compared to traditional funding. Crowdfunding can be more profitable for small amounts of financing, as it allows the entrepreneur to set prices based on consumer willingness to pay. However, as the amount required increases, the entrepreneur must distort prices more to attract pre-orderers, which reduces the gains from price discrimination. The model also highlights the importance of community-based experiences in making crowdfunding a viable alternative to traditional funding. If the entrepreneur cannot create such benefits, crowdfunding may not be profitable. The paper also finds that crowdfunders tend to pay more than regular consumers, as they are willing to pay for the enhanced experience and community benefits. This outcome is consistent with case studies where community benefits are significant. The model shows that through price discrimination, individuals with the highest willingness to pay become crowdfunders, as they enjoy non-monetary community benefits. The paper concludes that crowdfunding is preferred over traditional funding for lower levels of financing. However, as the amount required increases, the profitability of crowdfunding decreases. The model also shows that crowdfunding can be less profitable than traditional funding when the amount required is large, as the entrepreneur must distort prices more to attract pre-orderers. The results are robust to the possibility that the entrepreneur may take the money collected from crowdfunding and run away with it. The paper also highlights the importance of community-based experiences in making crowdfunding a viable alternative to traditional funding.Crowdfunding is a method of raising external finance by collecting small amounts from a large audience, rather than from a small group of sophisticated investors. This paper develops a model that links crowdfunding with pre-ordering and price discrimination, and examines the conditions under which crowdfunding is preferred to traditional forms of external funding. The model shows that crowdfunding can offer an enhanced experience to some consumers, allowing the entrepreneur to practice second-degree price discrimination and extract a larger share of the consumer surplus. However, the entrepreneur is constrained in their pricing choices by the amount of capital needed to raise, which can reduce profitability. The paper discusses the advantages and disadvantages of crowdfunding compared to traditional funding. Crowdfunding can be more profitable for small amounts of financing, as it allows the entrepreneur to set prices based on consumer willingness to pay. However, as the amount required increases, the entrepreneur must distort prices more to attract pre-orderers, which reduces the gains from price discrimination. The model also highlights the importance of community-based experiences in making crowdfunding a viable alternative to traditional funding. If the entrepreneur cannot create such benefits, crowdfunding may not be profitable. The paper also finds that crowdfunders tend to pay more than regular consumers, as they are willing to pay for the enhanced experience and community benefits. This outcome is consistent with case studies where community benefits are significant. The model shows that through price discrimination, individuals with the highest willingness to pay become crowdfunders, as they enjoy non-monetary community benefits. The paper concludes that crowdfunding is preferred over traditional funding for lower levels of financing. However, as the amount required increases, the profitability of crowdfunding decreases. The model also shows that crowdfunding can be less profitable than traditional funding when the amount required is large, as the entrepreneur must distort prices more to attract pre-orderers. The results are robust to the possibility that the entrepreneur may take the money collected from crowdfunding and run away with it. The paper also highlights the importance of community-based experiences in making crowdfunding a viable alternative to traditional funding.