The agreement has a blank for the most meaningful term: the valuation cap. If you raise a round below that cap (or just above it) the SAFE ends up being a good deal. But if you raise the next round at a valuation significantly higher than the valuation cap, you could take a haircut. For example, a $1MM cap that's followed by a $15MM pre-money valuation at the Series A would give SeedRamp a 93% discount on their equity. That's the risk.
TLDR: No way to tell what they might get for their investment until they offer you a valuation cap (and even then it still depends on the future valuation put on the company by the next equity round).
So you are literally selling them futures on your next preferred series, except if the valuation comes in below the cap, then they get extra stock, so there's no downside for them except total equity wipe-out.
Why do I feel like this is a leading indicator of imminent bubble collapse?
Beware beware. The investors in your next round WILL NOT LIKE THIS DEAL. Why? Their money doesn't go to building your business, it goes to paying off this SAFE.
They might not like it (especially if there's a large effective discount), but that's not why.
If you raise a next round the SAFE never gets paid off - it converts into equity in the round. None of the equity investors' money is at risk of being used to pay off the SAFE.
"We will ask you to give us some stock in your startup. You decide how much, but it has to be enough to make us interested. It all depends on your situation. A few percent, I'd guess."
I actually think this model fills an important need, but it's kind of a scam as is.
TLDR: No way to tell what they might get for their investment until they offer you a valuation cap (and even then it still depends on the future valuation put on the company by the next equity round).