Startup companies start off as 2-3 people, who are all good friends and don't mind working in a room. Then they hire another person, and it still works fine in one room. Then they get a bigger room, and hire a couple more. And so on. At any point, moving to separate offices would be a big change in company culture with negative effects on morale and communication as well as positive.
I need quiet and privacy and uninterrupted 4-hour coding sessions to be productive. Yet, I myself ended up putting 10 people in a room I once had to myself. It was a slippery slope.