I've given this a lot of thought recently, and I <i>don't</i> think you need to be in Silicon Valley. Rather, I think you need to be surrounded by a lively startup community, so that you have opportunities to interact with other startup founders and to learn from each other. The chances of that are much greater in Silicon Valley, but now that there's little pockets of startup activity springing up all around the US (and the world, it seems), it's not a necessity.