A core part of building a company with venture capital and in the Silicon Valley tradition is employee stock ownership. Most often employee ownership in private startups happens via stock options (in Sweden most often QESO, ESOP or warrants). But using options is not straightforward way to get the results you want, as Carta’s latest research shows (thanks Arne for the link). In the US only 46.1 % of options that were in-the-money (i.e. have value) were exercised (i.e. bought) by the options holders.
There are good reasons for employees to not exercise options if they will not be able to sell the shares to pay for the exercise and taxes (see Stripe’s fundraising of $2.5 billion that seems to be initiated due to the need to pay taxes). However, companies can and should make it easier to exercise options by allowing cashless exercise when it makes sense (i.e. for QESO and warrants as then the exercise doesn’t trigger social fees payments for the company, disclaimer: I’m not a tax expert, talk with legal counsel).