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I talked with one of my team members about another guy who is quitting. During the talk, he mentioned that it might be because there was no pay raise for the past 2 years. These guys (one who I was talking to and another guy who is quitting) are very good at their job, work hard, and love the company and I think it's unfair not to give them any pay raise. I also think that this can actually be the reason why people are quitting.

I want to give background of the company. The company is a startup and there is no procedure about pay raise. As a startup, we need to save money wherever we can but this really affects the company because we actually end up spending more money recruiting people and time to train them.

I plan to talk to the owner (I report to him) about pay raise for everyone in my team but not sure if that is a good idea.

P.S. I am their manager and I got a good raise every year.

Yes. As as manager, part of your job is going to bat for the people who work for you, and part of that is asking for pay raises. Especially if you are getting a good raise, you should be asking (and should have been asking) for a decent raise for your good workers.

If no-one was getting raises, that would be different, but as long as there is money for raises for managers, the manager has an obligation to take care of their workers, and pay raises are a very clear sign on whether an employee is valued or not.

Don't talk to the manager about "a" (singular) pay raise for your staff. Talk to him about what the policy will be for implementing raises - typically, organizations pay out a cost of living increase on a known, regular schedule (ie annually) plus merit increases for strong employees, plus promotion increases when a title changes due to someone taking on more responsibility. It sounds like your organization doesn't have any of these standards in place.

It's fair to represent to the owner that you know of frustrations among the team due to lack of raises recently, but you want to solve the problem for good - not just for now. Getting everyone a raise right now doesn't really do anything except postpone the conversation about raise policy until the next time people get upset.

Yes, you should. Ideally, a person should know company politics before joining - what results are expected and what can be achieved. Especially, if you want to work with top performers and people who care about company - if they won't get reward, you'll be left with mediocre who can't find job in other place - and it may cost more.

There are other things to consider:
If employee will continue to work, will he improve, get new knowledge, grow further?
Can company easily replace an employee?
Can old/new employee bring new energy/ideas?

It really depends on you relationship with the owner and how you go about doing it.

Personally, I would not go ask the owner to give raises to everyone on my team. This is essentially asking the owner to take money out of their own pocket. Remember, this is a start up. There is a very good chance the owner can't afford raises for everyone. I would not do this unless you were willing to take a pay cut in order for them to get the raise.

What I would do is talk to the owner about the fact that you have heard someone is leaving because they have not received a raise. Even go as far as to highlight the loss the company will incur if this person leaves. Then, let the owner decide what the next course of action is.