Part of the San Francisco premium seems to be the concentration of M&A dollars from local incumbents who constantly acquire more local talent. I'm an investor in half a dozen startups that would have already been acquired if they were in the Bay Area, but instead struggle to build viable standalone businesses since they are located elsewhere. Perhaps this is part of the reason YC focuses most of its time, money, and effort on local teams. Besides the concentration of resources for those fortunate few who become rocketships, the downside protection on the rest of the portfolio seems much better (in human, not just dollar terms).