So my guess is that these founders were either already successful previously, were well connected or had already bootstrapped quite a bit of the technology that would underlie the product (ie patents, team, etc...). Any or all of that the case?
They did their research and validated the market by finding prospective customers before raising. Which is a good model to remove risk from any venture – especially one that would take many years to build.
Just out of curiosity why not just raise 2MM+? What value is there in this to the investor unless they have the ability to back out of the prenogociated follow-on? It seems like an expensive way to get no peace of mind?
Just from practice, you'll never see this from normal (professional or practiced) startup investors. Nor will you see its identical twin, the required second tranche.
It's smart, because the discount for the follow-on was pre-negotiated, so investors get perhaps a more favorable discount if the company is a run-away success, and the entrepreneurs were able to buy peace of mind, and could count on the money regardless of macro-economic forces.