Forward exercising in an early stage startup is a great idea. The company doesn't yet have a meaningful valuation so you can exercise for next to nothing. The board typically sets the strike price of options low so that employees don't wonder if their options are already underwater. Also, by exercising early you pretty much guarantee that there is no difference between strike price and value at time of exercise, so you owe no taxes up front. Later, near IPO, when the value is much higher and set by external factors, it's no longer a good idea.

By exercising early, you effectively own stock at the date of exercise. If the company goes public or gets acquired, your gains are already long term capital gains as long as it's been a year. Also, you don't have to wait once the company goes public to exercise your options, then wait a year... you can sell right away, lock-up periods aside.

To summarize, early exercise is a cheap way to avoid paying taxes on your options until you sell the shares later. And then you're paying the long term capital gains rate on cash earned, instead of short term capital gains on a volatile stock which could easily go down in value.