At almost every start-up that I've been involved with, the approach has been to grant employees ISOs which have a strike price (albeit very low) that the employ

At almost every start-up that I've been involved with, the approach has been to grant employees ISOs which have a strike price (albeit very low) that the employee must pay if they want to exercise the options. They then have to run the AMT gauntlet and take on the potential tax risk. So while employees don't have to pay for the option itself, I'm not sure it's entirely accurate to say that employees don't have to shell out hard cash for the actual equity.