A soft cap and hard cap are fundraising goals. A hard cap is the absolute upper limit a team will take. Whereas, a soft cap is more speculative. A soft cap is typically a lower limit, more like how much a team is aiming to raise. If a team receives donations exceeding their hard cap, the funds are immediately returned to investors. Failure to do this is typically a red flag for investors. If a team doesnt reach their soft cap, funds are sometimes returned as well. The project is essentially on life support then. However, there is some ambiguity around a soft cap, and whether or not the team returns funds or decides to move forward regardless.
A real-world example is Assetreon Energy, a token whose ICO is ongoing. Assetron published their soft cap figure of $170,000, and hard cap of $3.35 million, in the weeks prior to the ICO. They also included a detailed breakdown of why those numbers were picked. The figures were calculated by accounting for expenses like staff, infrastructure, office payment, developers, and so on. Its important to investors that the soft and hard caps have a basis of some sort.