"The organic way to do it is to establish a first-rate university in a place where rich people want to live."

Obviously not the case. We can just go down the list of top universities and look at the ones that are in desirable places that aren't Silicon Valley. We can even have a laugh at all the names people came up with, like Silicon Alley, Silicon Hills, etc.

One very important reason is that the tech talent in the top tech hubs is old-growth, and recycles between all the different tech companies. And it's huge. Funding 1,000 startups for just 5 years still seems very, very small compared to the existing ecosystem in Silicon Valley, let alone the logistics of finding enough of them, vetting, competing with other funds, etc.