What exactly about it seems reasonable? He's making assumptions about my dedication based on the fact that I have a family. From that alone he really has no idea how many hours I would be willing to put in, how dedicated I'd be to the business, or how hard I'd hustle for him.

The only thing that seemed reasonable to me was wanting to work with someone that could physically be there with him at the program. If that were the sole reason for going with someone else over me I'd have understood perfectly. Instead he's basing his decision on weak anecdotal evidence. He worked with one other family guy that wasn't as dedicated to the business as he himself was and he came to the conclusion that the family part was what was holding him back from being a better partner. That doesn't strike me as sound reasoning at all.

I was thinking mostly about the remote vs local aspect. You are right that speculating on your motivation seems misguided. Although perhaps it's also not totally far fetched to assume that somebody with a family would want to spend some time with said family.