> If the start-up does not have cash reserves / cash generation to pay salaries, then the promised-equity has a very low value, so I'd expect the fee to be huge.

I agree.

In some situations where you are stuck working for the startup and need cash now out of illiquid startup equity / if you want to smooth out large risk that startup does not produce a profitable exit for you, then maybe this makes sense.

But, if you have the option to work somewhere else (a mature profitable company with enough scale so that your role is valuable) and getting paid 100% cash, it is quite likely that would be more profitable than working for the startup.