Steve "Four Steps to the Epiphany" Blank's series of blog posts on "The Secret History of Silicon Valley" is a good read on this subject. A short summary is that a lot of the early firms were either got mentors from or directly spun out of Stanford labs --- and that in the early years, most of what they were doing was related to defense projects of one kind or another. (Fred Terman, a Stanford professor whose name comes up all over the place, ran an electronic warfare lab during World War II, and was heavily involved in cold war follow-ons.) So, government money had more to do with it than purely doctrinaire libertarians might be comfortable with.

The whole series is here (earlier posts at the bottom):

http://steveblank.com/category/secret-history-of-silicon-val...

The first post is here, with a video of an hour-long talk given at a CIA sponsored conference:

http://steveblank.com/2009/03/23/if-i-told-you-i%E2%80%99d-h...