If it is capped then you replace “200m” by the minimum of “200m” and some agreed on amount, e.g., 10m. This protects the investor in case the first equity roun

If it is capped then you replace “200m” by the minimum of “200m” and some agreed on amount, e.g., 10m. This protects the investor in case the first equity round has a surprisingly high valuation, which would dramatically dilute them. At the same time, instead of agreeing on a valuation for the initial investment, you are agreeing on a theoretical upper bound on the current valuation.