[xyzzyz]

For the same reason why you might want to borrow money from one person, but not from another: people typically want to choose to whom they are responsible. You don’t want to suddenly acquire an activist minority shareholder, who’ll sue you for alleged breaking of your fiduciary duty to him, and distract you or force you to change your plans.

> They're early employees, why wouldn't they be rewarded? What makes a random person that just walked in with a wad of cash more deserving?

Not sure what you mean. The entire point is that people who run private companies often do not want random people/organizations to come in with a wad of cash and become shareholders, without people running the company having any say in it.