A variety of pull and push forces influence innovation in health care, with venture capitalists playing an extremely important role in marshaling the pull forces that drive innovation. The NIH (or government more generally) is responsible for reducing market failure by subsidizing research that no commercial entity would fund. Our analysis has uncovered several new facts on the operation of these entities. On the VC side, VC dollar allocations have moved away from investment in health care, and a disproportionate share of VC investments— almost 60 percent— are in drugs and devices. While there are many justifications for this allocation, there is also a concern than the VC model will not automatically bring socially valuable innovations to market, because it will emphasize private returns over public ones... Another striking fact that deserves further exploration is that three locations account for the plurality of scientific research and also receive the majority of VC investments. Whether this represents higher quality research from these cities, or a “valley of death” is an important question for future research.