ICQ is just a case in point: Many Israeli companies developed their “killer” device or application with assistance and investments from venture capital investors and funds – investments that paid off big time when the companies they worked with arrived at a successful exit, either getting bought out by a multinational, or going public themselves – turning into worldwide enterprises that, themselves, snapped up promising Israeli startup ventures. With over 100 Israeli companies trading on the NASDAQ – the majority of them in the hi-tech business – Israel is one of the world’s technology powerhouses.

First, some stats: Over little more than a decade, Israel has grown into a hi-tech powerhouse, with the technology boom fueling Israel’s amazing GDP growth of the past few years, says the Ministry of Industry, Trade and Labor. Nearly three quarters of Israel’s $70 billion exports last year were in the high-tech sector, Ministry statistics indicate, and the country has one of the highest per-capita rates of patents filed. In its latest report, the Israel Venture Association (IVA) said that high-tech companies raised $600 million during the third quarter of 2008, an eight-year quarterly high and up 45 percent from a year earlier, and 29 percent more than the second quarter. The World Economic Forum in its 2007-2008 report called Israel one of the leading countries in the world in technological innovation, ranked first for availability of qualified engineers and total expenditure on R&D.

The hi-tech boom, along with the solid fundamentals of Israel’s economy, has helped the country sustain strong growth for decades, with GDP rising most years. Israel’s GDP in 2006 reached $195 billion, according to the International Monetary Fund , and GDP per capita was $31,767 in 2007, the IMF said. After adjusting its forecast to take into account the world financial crisis, the Bank Of Israel still predicts that GDP will grow by 2.7 percent in 2009. Israel has free trade agreements with the European Union, the United States, the European Free Trade Association, Turkey, Mexico, Canada, Jordan, and Egypt, and last year became the first non-Latin American country to sign a free trade agreement with Mercosur. According to Bank of Israel statistics, industrial exports grew by some 27% since the start of 2008 and hi-tech exports, climbed at an annualized rate of 18.2% over the past three months.

But with the technology boom in recent years, much of Israel’s growth has been fueled by hi-tech development. As an umbrella group for those seeking to invest in Israeli hi-tech, the IVA lists dozens of VC firms that have portfolios of Israeli companies, some of whom have been working here for over a decade. Almost all the “name-dropping” companies identified with Israeli hi-tech – companies like Checkpoint, Nice Systems, Aladdin, etc. – were nourished by VC companies like Genesis, Gemini, Pitango, and many others.

From modest roots, many Israeli companies have grown to be world leaders in their specialties. One such company is Checkpoint Software, the creator of the modern commercial computer network firewall. Checkpoint was established in 1993 in a small Tel Aviv apartment, by Gil Shwed, Shlomo Kramer, and Marius Nacht – and today the company has some 100,000 customers and over 1,500 channel partners, and is traded is worth over $7 billion, with 1,800 employees worldwide. Nice Systems, which is involved in everything from telephony to web, radio and video communications, has been trading on the NASDAQ since 1996, and has over 24,000 customers in 100 countries, including over 85 of the Fortune 100 companies. Both companies subsisted on investments in their early days, going on to far exceed the expectations of early investors.

In addition to private funding, the government of Israel runs a number of programs that provide help to promising startups. The Office of the Chief Scientist, the Israeli Industry Center for R&D (MATIMOP), and programs like the Israel-US Bi-national Industrial R&D (BIRD) Foundation, among many others, lend a helping hand with logistics, advice, and even funding. The BIRD Foundation, for example, was established by the U.S. and Israeli governments in 1977 to generate mutually beneficial cooperation between the private sectors of the U.S. and Israeli high tech industries, including start-ups and established organizations. BIRD supports approximately 20 projects annually with a total investment of around $11 million per year. To date, BIRD has invested over $245 million in 740 projects, which have produced sales of over $8 billion. Since the establishment of the Foundation 30 years ago, the accumulated repayments have totaled $82 million.

Israel, in other words, is a bright – very bright – spot on the hi-tech world map, with so much innovation going on, many entrepreneurs who take their companies to a successful exit come back for another round, hoping to build yet another startup into a successful world changing company. In an interview with the Israel Investment Newsletter earlier this year, Gemini’s Carmel Sofer said that the rise of the “serial entrepreneur” was an increasing factor on the Israeli hi-tech scene. “We were some of the earliest to spot a key trend we see playing out right now: the return of successful entrepreneurs,” Sofer said. “We’re seeing serial founders of startups rebound off successful exits and with money in pocket, begin building new businesses. We’re seeing more and more of this caliber of professional starting new companies. They’re not necessarily interested in the money. They have a strong commitment to building a company and they’re coming from a variety of different fields.”

One of those “serial entrepreneurs” is Zohar Zispael, one of the most successful and prolific hi-tech entrepreneurs in Israel, or anywhere. With 27 startups under his belt, Zispael’s RAD Group of companies, which he co-founded with brother Yehuda, is considered the top developer of telecommunications startups in the world. In an interview with the Jerusalem Post, Zispael said that he had worked with nearly all the VC companies in Israel, plus a good number from the U.S. “In the early days, before there were VCs, we raised money ourselves. We got some help from the Chief Scientist on some projects as well,” he says. In fact, he says, the assistance the government offers encourages VC investors to do business here. “The Chief Scientist and other programs run excellent programs, which pay off for the country, encouraging not only specific projects, but an atmosphere of development, and a feeling that with enough hard work, a company can succeed. That drive encourages VC investors, who are more willing to put money into startups, and in the end, when there is a successful exit, both the investors and the country benefitting. Even if a company doesn’t make it, the technology they developed with find its way into another project,” Zispael says.

But hasn’t the world financial crisis changed the rules? What are the prospects for Israeli hi-tech in the coming years? Zispael remains optimistic, saying he expects growth to continue. “So far, I haven’t seen a falloff in technology sales, at least by established company, although I do expect a dip next year. But things will definitely not get as bad as they were in 2001,” when the dot com bubble burst. “This bubble is for the banks and real estate, so it will affect hi-tech less,” Zispael says. While VC “angels” may temporarily be intimidated by the market and may hold off on their investing activities in the short term, and some brand new and almost-mature (pre-exit) companies that have a high burn rate may face real problems, he expects most well-run developers to survive the crunch. “If anyone asked me, I would tell them that the time to buy or invest is when everyone else is afraid to, because you can get better terms,” Zispael says. “Those investing in new companies now are looking at exits in perhaps five years,” when things should be looking much better, he says.

And if there’s one thing Zispael has proven, investments in Israeli tech pay off for those willing to take the investment risk. When it comes to the innovation that is a feature of Israel’s hi-tech developers, nothing’s changed, he says; the fundamentals remain the same. “What’s changed is the market, but the ideas are still out there,” he says. And those ideas are as great as ever, according to Gemini’s Sofer. “We’re now witnessing the emergence of the mobile Internet, and this is coming from Israel. The mobile phone is no longer being looked at just for its voice capabilities, it’s being considered as a data device,” he told Israel Investment Newsletter. “Many are trying to take web applications and make them work on the phone. This is just part of the story. Those companies, and many of them are located in Israel, who can start developing mobile applications from the ground up as they look how users will interact with the Mobile Internet are going to be the winners. These companies are working on application development as much as building sustainable businesses.” Regardless of investment climate, that development will continue – and investors like Gemini, who know a good thing when they see it, will continue to bring the future Israeli “stars” to successful exits.

Things just seem to be going from bad to worse, and by now, even Mrs. Cohen from Hadera is an expert on the roots of the mess (if she isn’t, direct her to http://tinyurl.com/4sgwq7 for details on the initial mortgage fiasco that kicked off the tsuris we’re dealing with, and to http://tinyurl.com/4y6yev for information about the far more serious credit crisis that is threatening to bankrupt everybody). But who am I to discuss the technicalities of the financial crisis the world finds itself in? For that you have armies of commentators and pundits, who all have their own ideas and theories about the why and how of the mess, and what to do about it. My purpose here is to document developments that have accompanies the crises on the internet.

Once upon a time, some of this stuff would have been dismissed as conspiracy theory junk. But extraordinary times call for extraordinary ideas, and if you could believe even half of what’s been going on in the world of finance in the last few months – and especially the bailout plans proposed over the past couple of weeks – it’s not such a stretch to believe some of what the theorists say the government has in mind for us.

For a conspiracy theory to hold water, it has to follow some basic rules, like the ones listed at http://tinyurl.com/3soxrj. The main question in any good conspiracy theory is, of course, who stands to benefit? Then, you furnish the appropriate evidence – a quote, a document, etc. – “proving” your point. And then you just fill in the details with articles from the internet. You need some facts and quotes – after that, it’s up to you how to spin them, or whether to accept or believe someone else’s spin.

Let’s start with the Chinese: They have lots of money, and according to some sources, China has threatened (http://tinyurl.com/4gcrkm) to cause a run on the dollar by dumping the hundreds of billions they have accumulated, courtesy of American consumers. Last year, a bestselling book in China fingered the Jews as the world’s shadowy currency manipulators, and the Chinese lapped it up – with even those in the top echelons of society subscribing to the idea that a group of Jewish bankers, led by (who else?) the Rothschilds, controls the world’s currencies. But check out this quote by the book’s author, Song Hongbing: “People in China are nervous about what’s going on in financial markets but they don’t know how to handle the real dangers. This book gives them some ideas” (http://tinyurl.com/4bbt86). Ideas – as in how to use the methods attributed to the Jews to manipulate the world’s currencies themselves! Why? In order to become the dominant world power. Motive, opportunity, and means – clearly it’s the Chinese!

But to be fair, the dominant theory on what caused the crisis rests on the motives of the U.S. government. According to http://tinyurl.com/47l84p, “some members of our Congress were intimidated into voting for corporate welfare with the understanding that if the measure didn’t pass – it was likely President George Bush would have to declare Martial Law.” (this claim is attributed to an official of FEMA, which is empowered to deal with national emergencies in the U.S.). Why martial law? It’s part of the plan to institute Continuity of Government (http://www.continuityofgovernment.org/) in the U.S. in the event of a major catastrophe (like 9/11, when the regulations were first enacted). If it was felt that the “situation” was too unstable – like riots outside banks by panicked depositors demanding their money – the President could declare a state of emergency, effectively suspending the constitution for as long as it takes to “restore order.” And according to the theorists, Bush and company cooked up this crisis in order to be able to declare martial law at some point, and remain in office beyond January 20, 2009, the inauguration date for the new president (http://tinyurl.com/4rgzem).

But how will that solve the financial crisis, you ask? It’s all part of the plan. The first step would be to declare a “bank holiday” in the U.S. – closing down all banks and preventing withdrawals for a few days, similar to the Bank Holiday of 1933, when Franklin D. Roosevelt closed the banks from March 6 to March 10 to keep depositors from bankrupting the banking system by withdrawing all their money. Given the recent runs on several banks and the low liquidity in many others, it certainly is a possibility, some say (http://tinyurl.com/5xejq5).

Then comes a revisal of the entire currency system – really the whole point of this exercise. Dollars will be phased out, and a new currency, called the Amero (as in “American style Euro”) will move in. You see, the master plan is to create a single world economy in the long run – the easier for the powers that be to control everyone – but before that, they’re working on regional economies. The Amero would unite the U.S., Canada and Mexico in a single unit of exchange – much like the Euro does in Europe – allowing greater unity between the three economies, a sort of extension of NAFTA (the North American Free Trade Agreement).

Conspiracy theories, as we said earlier, are built on a sprinkling of facts with a big dose of speculation as to what those facts mean. But unlike the wild idea that the government controls the economy, the Amero is not a figment of some nut’s imagination – in fact, it has its own Wikipedia page (http://en.wikipedia.org/wiki/Amero). The idea has apparently been supported by a number of policymakers in all three countries, and while many “legitimate” sources ridicule the idea (http://tinyurl.com/2bhlz9), this Virginia congressman (http://tinyurl.com/4vngsv) confirms that there is an official government plan to create a North American Union modeled after the EU, with all that the term implies – like a common currency. The financial crisis is designed to knock America and Europe down a couple of pegs, putting the overpaid and overpampered Western worker more in line with their counterparts in the developing world – and leaving even more of the world’s fortune in the hands of the big shots. Suffice to say that the exchange rate of dollars for Ameros won’t be one for one, according to the theorists,.

While it all may sound ridiculous, remember that the idea of ostensibly capitalist governments buying out banks in part or in whole would have sounded like Communist propaganda not too long ago. So, anything can happen. And maybe one day, this Nigerian-style e-mail scam message (http://tinyurl.com/4rnkp6) from none other than the head of the U.S. Treasury may even appear in our inboxes!