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Excel's pseudorandom number generator is weak: Agreed. The claim that someone, presumably a well-situated person in the Canadian government, might be able to put their finger on the scale for this applicant versus the others seems reasonable. Otherwise, the notion that a bad PRNG, even the one in Excel, will "favor" one group over another, or one person over others, seems a stretch.
Ah yes, North America literally has massive expanses of land just waiting to be cultivated by small, remote-only startups based in rural areas...

... and we literally block as many people as we can from coming here.

That's not exactly honest. There's a reason there's no small remote-only startups in those massive expanses of land; there's nothing there to begin with.
If you're only interested in growing an economy — as opposed to growing a society — it makes sense to give that land to businesses who will pay taxes.
Become the Uber for Ostriches, while only being 70 miles from the nearest grocery!
I thought this was a tech startup forum. Since when did meatspace have any effect on a startup's success?
Even if you're the only employee in the company living in that place, if it's not somewhere with basic conveniences like stores within 20-30 min drive, that sounds like a huge tradeoff.