I think getting you to sign up is the start of a process that culminates with you inviting all of your contacts. The username/password step is just the top of the funnel.
Ah yes, that could be it. I don't think I would advise a startup to do that though. If you have to be that heavy-handed to make it spread, what that really means is that the site isn't good enough.
They can show more registered users. I imagine they will turn around and show investors the inflated count when they raise more money ...
I was thinking the same, but don't investors look into the companies they're investing in, investigate the statistics and information the company provides? I would think that investors would see the people have to sign up and realise the registration numbers are artificially inflated.
You would think, but I imagine some will be swayed by the numbers even if they do think about that.
Once you have an account, they can start contacting you, and increase the probability of you participating/contributing content/inviting your friends.