Unis have always been a bit out of the way, they are not 'sponsored by banks' they were sponsored by Churches and congregations, then the elite.
Waterloo was Waterloo College, a Lutheran Seminary, and grew out from there.
It was successful probably because it was very much focused on Tech, unlike most other schools, and didn't appeal to multi generational families, but 'anyone'. The local mennonites are also extremely good students, you don't hear about them, but they get good grades.
It's a great tech school, but one of the ugliesst, most sparse and uninspiring campuses imaginable. If we think of traditional Uni like an 'Ivy Campus' or 'Oxford' aesthetically - UW is like one of those 1960's, concrete block kind of Soviet Utilitarian places. I mean it could be worse.
The way I came to appreciate the aesthetic of UW was to realize it is a school of the 20th and 21st centuries, whereas the Ivies are schools of the 18th and 19th centuries.
When you think of an abstract university setting, ‘the future’ looks like UW.
During the mid 20th century there was a lot of that going on.
Most 'modern' designs are rubbish, but at least what they make today is much more interesting, for the most part.
In the 1970s, students at Cal State LA called it Cal Concrete.
At this point it’s a reinforcing flywheel just like it is with MIT, Stanford, and Berkeley. I think they went with a different route though. They give minimal scholarships and afaik they don’t go out of their way to recruit wunderkids.
I suspect there isn’t any single answer / magic secret. They just built a good culture centered around teaching kids STEM effectively, kids and parents recognized it quickly enough which created natural competition to get in until it became a flywheel effect.
Originally this was only for professors (and I'm not so sure there weren't conflicts of interest). My first employer fought the university for the right to his Masters' thesis, and won, establishing the precedent for grad students (and hence my job).
From what alumni told me, undergrads are incentivized to apply everywhere for internships as part of their courses and especially during the off-cycles (winter) for internships when they are effectively the only ones looking. Coop also means someone who can't convince an employer to pay for them won't graduate, so there's a nice selection bias.
The large firm involved in the origin of UW was Electrohome, one of the top consumer electronics manufacturers of its time.