This is likely convertible debt/equity so the company hasn't been valued in the manner of a traditional priced equity round. You can use other valuation methods

This is likely convertible debt/equity so the company hasn't been valued in the manner of a traditional priced equity round. You can use other valuation methods to determine a much lower 409A valuation. If they say "several hundred dollars", this is likely coming from actual knowledge of their own 409A valuation number.