Why is VC so powerful in Silicon valley?

Starting up atoms-based businesses is extremely capital intensive, which means only businesses that have a safe, legible business model can get financing.

Bits-based businesses have startup costs, but much less, relative to their possible scale.

That's a great fit for venture investing.

But if the cost of making software drops, then even the VC model isn't that important, more people can simply build little bits of software and then bootstrap the ones that get momentum.