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My bad, misunderstood the nature of these type of options. I was making the assumption that the options could be exercised and then sold straight away. Eg, employee has option to buy during this window at a strike of 1.1, current value 1.3. I presumed the issue was raising the initial (options x preferred price) cash plus any taxes/fees involved.

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I believe most companies whose stock is publicly traded provide this for their employees. If you have stock in, say, Google, when your stock vests, you can have it sold and take the difference directly--no loan needed. I've never done such a thing, so it's only hearsay on my part, but that's how I've understood it to be.

It's called a cashless exercise. You exercise and sell the stock right away so you don't need to have the money to buy.

However the problem is most startups in this case are not liquid so you cannot sell your shares (with some exceptions). Google and other public companies give you direct shares via RSUs since they can sell part of your shares to cover the taxes.

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