Its completely reasonable to rule someone out for funding because they have a child (although the "woman" thing isn't completely fair). Anything that will take time from the startup will negatively impact the startup's chance, and when you don't have a lot to make decisions on, whether there are obvious distractions is a fair way to make the call.
Illegal? Starting a startup is demanding beyond any normal job. If discriminating based on things that will take time from work becomes illegal, the industry is done in the US and will move somewhere else. Investors have little enough information as is. Take any of that away, and they start to wonder whether investing under those conditions is worth it anymore.
