Traditionally this is from savings, family and friends, borrowing against your home, etc. And it feels like there is more opportunity to this capital in other places, i.e., anecdotal evidence that lots of folks in other places will put up $5-20k to invest in a friends startup. This doesn't happen as much in Canada (tight accredited investor definitions, higher taxes, higher real estate prices and home borrowing).
Indeed, the valley has the benefit of having lots of successful tech entrepreneurs reinvesting back into the community whereas most other cities depend on more old school angels or gov financing who only focus on safer bets.
This is not to knock on angels in canada, but an important to note when comparing SV with anywhere else... its not just about having VCs with big funds.
