You should still be honest with employees. They'll prove better in the long run if you are. Not a lot of stories where withholding the truth from your employees ends up being something that a boss feels great about...
It's a very fine line. I'm not disagreeing with you entirely, but every startup I have been at, bar one, has run out of money. Sometimes multiple times. You get bridge loans, venture debt, whatever. I also find that even most seasoned startup employees don't really understand the finer points of finances in a venture backed company and how quickly goings can turn.
It would generally be advisable to tell someone coming in "We have 2 months of finances, but expect (or need) to close this large deal to get some sustainability." But at what point do you not need to have that conversation? With 6 months of money? 12? 24?
Yeah, I see no problem if you tell the employee, "I can pay you for two months." At least he knows what he's getting into. Besides, even a "safe" job can abruptly end, often with much less than two months' notice.
