I am located in Minneapolis and co-founded a startup in 2001 that was acquired in 2004. We had a less traditional funding route -- a single private investor / angel who helped get everything going. We pulled most of our engineering talent from a local college and I used connections with a past professor to cherry pick the best of a couple of soon to be graduating classes.

I'm still living in Minneapolis, but having since worked with a number of people in the Bay area and having traveled there frequently, I can say that the environment does seem quite a bit different.

There are a lot of advantages to being in a "startup hub"... More talent that's easier to find, more people to bounce ideas off of, more access to traditional and non-traditional funding sources, etc.

One advantage to starting out in Minneapolis that we found was that salaries for our first employees were significantly cheaper than what we've heard from friends in the Bay area. In addition, the work ethic here is quite high -- it seems easy to find committed, dedicated employees.

Here's a recent article about Minneapolis being rated the top metro center for business (in general, not startups or technology specific).

http://news.morningstar.com/news/ViewNews.asp?article=/DJ/20...

Here's a startup that I recently found out is in the Minneapolis area -- http://www.yugma.com/ -- I'm at times surprised to learn of all the startups that are more or less under the radar here.

If you have the engineering talent and the funding sources, I think you can absolutely get started in a non-"startup hub". Having said that, there are definite advantages to being in a startup hub.