The more liberal atmosphere around non-competes surely played a role. Silicon Valley was also ideal because the land was inexpensive in the early days, compared to most metro area real-estate, the weather was vastly superior to East Coast cities like Boston and NY, and the culture on the East Coast was stuffy, slow and rigid (whereas there was excitement to going west, blazing a new trail; the culture of California was very different from the East Coast). Having the old corporate giants on the East Coast was oppressive and antithesis to the birth of something like Silicon Valley. SV was the new world, they built it up from farm land.

Given the context, it doesn't matter if Boston has nice universities: they become poaching grounds for Silicon Valley in that respect. The Yankees don't care if their minor league teams are in Tampa or Atlanta, they're taking the talent regardless of where it's at. The talent will almost always happily move for the right price and or opportunity.

The concentration of VC funding didn't happen before the local tech companies. It happened because of the local tech companies.