You're opening yourself up to some fairly significant risks. If an employee is using a computer for personal stuff, chances are that it's been pwned by a hacker or botnet, or if it hasn't already been, it could easily be. If they're using that personal machine for your development, that pwned computer means that all your source code, production deployment, possibly user data, etc. is available for the taking. A hot startup is a significantly more attractive target than an individual employee.

Now, the calculus is likely a bit different when you're just a few guys noodling around with an idea than when you have actual users or worse, customers. But if I had enough money coming into my company to fund employees, one of my first priorities would be to get them corp laptops & desktops and request that they please try to limit personal usage of those machines, particularly usage outside of the corporate firewalls. After the hundred grand or so for an employee's salary, getting them nice hardware is peanuts. And if you're taking customers' credit card information or other personal identification, you have a responsibility to them not to open that information up to any hacker who can pwn a laptop.

I somewhat agree here, but when a company is small it could be awkward to have a policy where you buy computers for some and not for others, right?