I am employee #1 in a startup with some substantial equity in it.
Our startup was funded by angel money and I have worked from the beginning for a salary way below market rate. Now, venture round A is coming. I talked with a founder regarding my salary and he said that while my salary will go up, it will continue to be below market rate.
I understand that everything is negotiable and there are no two identical cases. However, I would be interested to know whether it's a common deal or not (to continue working with a below-market rate after round A funding).
One more thing. I understand the rationale for reduced pay in early-stage startups. (It reduces cash burn rate and makes the startup's runway longer). I am not sure that I understand the rationale for venture-backed startups, though. The burn rate becomes way higher and reduced pay for founders/first couple of employees won't make a dent in the length of runway.