I agree on funding, but talent (1) can be found elsewhere (2) is much easier to attract when you're not in Silicon Valley, competing with thousands of other great companies.
Talent is in Silicon Valley only because opportunities, and opportunities are in Silicon Valley only because of funding.
Yes that's perfectly true, but the initial funding frequently requires the talent to go find the money.
Take YC for example; Many people from Europe would love it if YC accepted applications from London or Berlin - and - let them stay there for the duration. But instead if they want to join, they're required to move out to California for a while. Because it's not possible (or at least, easily feasible) for PG to run it remotely, or franchise, or double-up each year, etc...
It's the sheer concentration of talent and capital that gives SV its lead imo. I wouldn't necessarily go there just looking for a job, but I certainly would when looking for funding, even though that would be an international leap for me. Then if the startup fails, there's dozens of others looking for talented people of any skillset in the area, there may not necessarily be so elsewhere. Then after a while, you can go try founding another startup of your own.
The safety net of being able to easily jump to another startup can't be underestimated.
NB: Also note that SV has international reputation that can't be understated either. I can imagine shifting from London to SV for funding, but it's a much harder sell to shift to Austin just because the rent is cheaper. If I'm following the rent rather than the funding/talent, why not move elsewhere within my own country?
Talent is in Silicon Valley only because opportunities, and opportunities are in Silicon Valley only because of funding.