It's my understanding that the objective of the cap is to try to set a fair valuation prediction for what expect the value of the company to be at the Series A funding date, which might be 12-18 months out. If I were to set the price at today's fair valuation, then it would be the same as a priced round.
The primary challenge I've been told is setting a cap too low (for example, $4M) when the actual valuation at series A is maybe $10M-$12M. With a 20% discount to the angel investors, and a 4M cap, the angel group would own 25% of the company, after converting the discount and VCs are forcing additional dilution on the founders to insure their favorable ownership position.
If we intend to raise A in 12-18 months, perhaps the right idea might be today's estimated valuation *1.5 or 2?