I've lived in 6 cities in the US: Minneapolis, Chicago, Providece, Los Angeles, Fresno and now SV. I've also spent significant time in Dallas, New Orleans and Toledo.

For me the issue is culture.

Chicago, there is a high tech community, but it is generally focused on helping the other industries in the area function. Chicago also tends to be kind of a jock driven town, and tends to scares geeks underground IMHO.

Providence, because of RISD and Johnson and Wales tends to be an arts/food driven town. Players from Brown don't tend to stay around long enough to influence the culture too much. They're too busy figuring out how to get into Harvard or Yale Grad school. There also tends to be a strong current of complacency among the locals that makes it hard to innovate technologically. The biggest tech firm in Rhode Island is GTech, a lotto machine maker.

LA is all about the movie and music industry (and a little bit about aerospace). There are plenty of geeks in LA, but they all tend to serve the larger interests of the movie, music and aerospace industries. A lot of geeks I ran into would have been interested in developing their own VFX shop, but you have to have a lot of connections to make that happen. LA is also run by pretty people. And, that makes it harder on geeks, IMHO. It made it hard for me, and I moved after a year and a half.

Fresno is all about farming, it's really hot, and I'm shocked I lasted a year. That's all I'll say.

SV on the other hand is steeped in technology and startups. My day job is as a ER nurse, and in the first year of being here, 3 people at the hospital offered to connect me with investors. I started the hackers and founders meetup ( www.hackersandfounders.com) a year ago, and now there's 350 people on my mailing list, and we have 20-25 people show up every 2 weeks to talk tech and startups. It's just in the air here.

I think that SV offers a much better ecosystem for startups than the other towns I've lived in my several orders of magnitude. There's already water, carbon, and oxygen. Silicon Valley's orbit is in the green belt of the startup sun.

Trying to do the same thing as YC in a different area of the country would require a lot of terraforming to be able to support a startup ecosystem. It's possible, but like colonizing Mars, it's going to be a lot more expensive to support an ecosystem there than on earth.

If I were going to recommend starting a technology company in another area, I'd definitely look at the strong industries in that area. If I were starting a YC clone in Detroit, I'd fund manufacturing technology startups, and perhaps robotics companies. If it was Dallas/Houston, I'd fund petroleum tech or energy startups. If it was San Diego probably biotech. LA, I'd focus on more media oriented startups. Fresno, or the rural midwest, farming automation technology.

Startups outside of Silicon Valley could have a competitive advantage if they can focus on building technology that supports the local industry. That way the networking that naturally happens can strengthen their business. I talk with a lot of hackers here that are interested in building tools for specific businesses or industries, but they have problems meeting people that work in those industries and aren't geeks. A seed fund could take advantage of that.