[SpeakMouthWords]

Do they honestly believe that startups so close to death can actually turn around with a sufficiently high probability that this investment is worth it?

If so, all power to them. They obviously know something others don't.

[api]

I'm sure the valuation cap will be low, and maybe SAFEs with a discount too. It's corporate payday lending.

Not necessarily saying it's bad. Payday lending to poor consumers is scummy because you're addicting them to high interest debt, but corporate finance is different. A SAFE is not debt -- at least not to an individual -- and this might rescue a few good companies with a high enough probability that it would be worth it to the investors, founders, and economy as a whole. You're gonna take some dilution but if you believe in your venture and persevere then... well... as they say it's better to own 1% of success than 100% of failure. :)

[tyingq]

>>A SAFE is not debt -- - at least not to an individual

There's a dissolution clause that requires payback before any other distribution of company assets. So, not an individual debt, but effectively the same if there are any assets.