Why not, if both parties are happy with the arrangement?

Because the total equity+salary package might have a future value that is much greater than say $200k.

Plus, the question really is 'why not?'. Access to H-1Bs could foster early growth in startups and, in the long-term, increase employment.

Because people is early-stage companies are compensated with equity more than salary, and bet that their equity value will go up dramatically.

Plus a lot of startups have foreign founders and these people need visas. So-called entrepreneur visas an not suited for companies that take investment.

People could go to a startup in exchange for equity, if they were willing to bet that the startup would succeed and expand. Others might want to go to a startup that they think will change the world, giving them non-pecuniary rewards.