This firm clearly put a huge amount of stock in education. They were 4 blocks from a major CS university, and a significant number of staff were recent grads. I suspect the CEO had a masters which only adds credence to their belief in the education system.
On top of that, they knew how much I was making ($x), how much I was asking for ($x + $50,000), and ended up offering me more ($x + $150,000). That's not the kind of thing you do when you're trying to dissuade someone from taking a job with you. Especially when the offer is 100% cash (company was private and they offered no equity).
I strongly suspect that this person came from a bubble of education, and just didn't understand how you could be a poor student and then successful outside of academia.
Your resume is a showcase of your best accomplishments. Short of clearance-level interviews with your family and friends, people in C-level positions ask for transcripts from 20 years ago because it's the only intelligence concerning your failures they can get their hands on (your previous employers won't ever attest on-record that you sucked).
So with that in hand, think about how you're going to feel when the only things they want to talk about are topics you were struggling to understand while your brain was still underdeveloped. He's big-dicking you to ensure your submission in any ongoing business relationship, and probably lowball you on salary just because he likes taking things from people after humiliating them.
Asking about failures in past jobs is fair game-- you are free to disclose that much at your discretion. Asking for a transcript itself isn't even that weird either, just to verify you went to the school you said you did. But grilling you about failures from 20 years ago is someone engaging in emotional abuse; they're desperate to have something to hold over you.