Me and my friends have a small startup that received 20K seed capital from business incubator. We used international vendor for software development. But we didn't pay the vendor directly. One of our team members paid them out of his pocket (wire transfer) and then we had to compensate him through check. Do we now have to issue 1099 for this team member? Technically, he didn't make any profit out of it as he transferred 100% of what we compensated him for. Amounts were ~$2500 and ~$3800 (through other team member).

That is a repayment of a loan that does NOT have to be reported on Form 1099.

Just make sure the payment is properly documented on the company books as a loan repayment.