Six months of severance per fired employee is a rounding error
For a marginal startup founded on a Mastercard and only tenuously on the right side of the border between life and death six months of severance is not a rounding error.
1. Don't found a startup on a Mastercard. If you're bootstrapping, pay for it out of consulting income. Stop believing the HN party line that failure doesn't have consequences. It can and, for many, it does.
2. Feel free to ignore #1, it's your life, but don't hire employees if your "funding" is a personal credit card. Really, don't. You're all kinds of not ready to be responsible for other peoples' income.
3. If you really can't afford a 6-month severance, then pull connections and give an amazing reference so he'll take that as his severance. Let him represent himself as employed, pay him during the gap, and have him line up a better job than the one he has already. Don't have the connections to place someone out on terms that he'll accept? Then how the fuck are you ever going to get funding or a first client? Take the message and hang up the phone.
For a marginal startup founded on a Mastercard and only tenuously on the right side of the border between life and death six months of severance is not a rounding error.