I just heard one of the founders of this Y Combinator group. They have an interesting model where they bring in 20 or 30 IT types per year with good ideas and incubate them – its part angel capital, part incubator.
This guy was adamant that this kind of thing can really on work in a place like Silicon Valley.
But I would challenge that notion. At the same time, this guy said that it is easier now for IT firms to start up anywhere than ever before.