This paper focuses on interactive innovation. It starts by operationalising Regional Innovation in the context of multi-level governance. It shows how regional and external innovation interaction among firms and other innovation organizations is important for regional innovation potential. The ability to access and use funding for innovation support for regional firms and organizations is crucial for regional innovation promotion. Equity investment funding is more important than public funding, which tends to be cautious and otherwise risk avoiding, except in circumstances of market arrest or failure to develop. Regional systems of innovation are broader than single sectors or clusters but some of these will be strategically privileged recipients of policy support because of their growth performance or potential, rather than, as in the past, their uncompetitiveness. The paper devotes space to exploring biotechnology clustering from a regional innovation systems viewpoint, as an instance of rather strong sectoral, regional innovation systems capabilities, though integrated also to global knowledge supply and markets. Illustration is provided of the way such sectoral innovation systems work at local regional level by reference to cases from Cambridge, Massachusetts and Cambridge, England.