Sorry but if they "deserve" more money they should find a job where they would be payed that. As an employee it's your own responsibility not to get screwed by your employer. If they decide not to pay you, leave.
The same goes for the employer. It's their responsibility to not "accept death". Accepting death is the mindset that will almost always lead to failure.
This is true both ethically and professionally. If you screw people, word gets around, and you just alienated all the talent you built a relationship with. It also makes you a bad person.
If you ask loyal employees to stay on for the sake of their equity or the sake of making something great, that's fine, but if you're funded and not delusional about your chances it's unlikely you will be in a position to do this in a fair way.