Set this deal on fire and run. Do you want to be a founder or an employee of your own company? Because that's what you're deciding here.
Let's start with milestones. If you're a startup, expect to pivot. Your product will change, your metrics for success will change, and so your milestones must change too. Locking in milestones at the onset locks you into a single strategy that you must execute on for two years or lose your funding. Not only is this bad for you personally, it's deadly to your business. You must be willing and able to adapt your course as you discover who your customer is and what they want.
Investors are not running your company, and they can't predict the future. No one can. If they *could* predict with certainty what would turn your business into a success, they wouldn't invest. They'd hire an agency to build it out, and put together a budget, with milestones. Sound familiar?
Inevitably you're going to miss the moving target. Then what happens? The investors get five times as much equity, diluting you to barely anything. In other words, you hand them control (I'm assuming they wrote the worst case scenario to give them more than 50%) of your company for free. They bundle up the company as an acquihire, they get their money back, you get a job at Yahoo.
Here's your counteroffer:
(1) No milestones, no tranches. They invest all the money they're willing to invest now. If they're unwilling to invest more before seeing progress, okay, no problem, they can invest more at the next round.
(2) If no one wants to fix valuation, then do a convertible note, uncapped. They won't agree to uncapped but it's irrelevant. Their offer is so extreme you'll have to go all the way to other side of the globe before you can find a reasonable middle ground on a cap. Limit their ownership to 20% in any scenario.
(3) No board seats.