1. Like relying on an unpaid interns you limit your potential employee pool to the group of people who can either afford to work for free (no cash right now), have no better option than to work for free, or who have to work a second job to pay their bills.
2. Most of those people won't understand the probabilities of success and payout amounts to founders, employees, and investors under the variety of plausible financing and exit scenarios.
3. You didn't mention personal guarantees on the company's debts to the employees. How do you collateralize your obligations to the people? Are the employees retained under this plan sophisticated enough to understand the credit risk they're taking? Are there covenants or debt coverage ratios you're committed to maintain?
4. What happens when you fire someone (or they quit) before the fundraising?
Why not just make a loan to the company yourself and give them cash? 2nd mortgage or from friends and family... Seems cleaner.