Nervous, a young man rises and strides to the front of the conference room, his eyes darting around. The perceptive observer notices a small lump in his throat, as he observes the eyes of those present boring into him. Thoughts race through his mind – Am I good enough? What if they laugh at me?

Well, there’s no turning back now; he’s here, and it’s his turn. So the presentation begins – and as he feared, he’s in for it. “Too loud,” shouts one, “no, not loud enough,” says another. “I don’t get it. How are you going to make money with this idea?” “Isn’t there already an application that does this?” “It sounds good, but what’s your selling point? Without an elevator pitch, you’ve got nothing!” And so on. He sweats as emotions churn inside him – anger, indignation, even hints of depression. Am I really that incompetent? But then our young man remembers where he is, and sighs with relief; better here, at “presentation practice,” than in front of the investors!

Call it the last revenge of capitalism over the hippy-dippy 60s and 70s: The techniques perfected back then by therapists doing group counseling are now a mainstay of Israeli hi-tech life. Instead of seeking to enhance the personalities if participants, today’s hi-tech “group therapy” sessions are dedicated to marshaling the power of “the we” to helping entrepreneurs improve their game and presentation, the better to attract investors to their startup idea.

“Today’s investment climate is tough, and any entrepreneur seeking funds had better be on top of their game,” says Sharon Weshler, a social media expert and sponsor of a series of roundtables dedicated to helping entrepreneurs improve their pitch. “The roundtables are a form of social networking where entrepreneurs can get together and help each other improve their presentations,” Weshler says, and the experience and input of the members of the group can go a long way towards making each one “the best that they can be,” he says. Once they work out the kinks in their presentation, says Weshler, companies have a much better chance of making the money connections they need to survive and grow – and some of those investors may just come from one of his many contacts in the VC and angel investment world, he says.

At a recent roundtable run by Weshler and Aviad Levy of the Termiks startup center, eight entrepreneurs showed off what they hoped would be their million-shekel ideas. One of them, Yubitech, definitely seemed quite ready for prime time – but then the company has already moved beyond being just an idea or an early beta, and has won a bunch of awards and contests with its cellphone platform development technology. Perhaps Yubitech CEO Danny Weissberg was attending as an example of just how far candidates can go with the right kind of guidance.

Most of the other ideas were pretty early stage, ranging from the practical (an innovative nursing home management) to trendy (an environmentally friendly business portal) to futuristic (genetic manipulation of grains) to downright mysterious (a home media device that the inventor would not disclose too much about). In each presentation, participants peppered presenters with questions about the how, what and why of their product – as in how easy it would be for investors to “grok” the idea, what problem or meet it was supposed to solve or supply, and why it was better than the competition (or, if there was no competition, why the world needed it).

Interestingly, not all the presenters were able to answer those questions satisfactorily, indicating that they had not given much thought to marketing. And that’s too bad, says Weshler. “Without the marketing, the greatest idea in the world will just sit on the shelf. The only way to get your idea across is to make it make sense to the people who can give it life, the investors.” That quality and saleability are divorced from each other is clear to anyone who has gone to a bad Hollywood blockbuster that got funded for tens of millions, or watched a z-grade TV show that keeps coming back, season after season – while the quality movies are relegated to the art-house cinemas, and the good shows get axed after half a season. After each presentation, Weshler and Levy gave participants their considered opinions on what the presenter needed to do to improve their presentation – so that their quality ideas get the funding they deserve.

Once an entrepreneur has the appropriate feedback from his or her peers, what comes next? Well, the smart ones will start working on their pitch – and for that, they can turn to Top Class, a Ramat Gan firm that runs various courses and classes in schools and companies to help participants improve their English. And for the hi-tech entrepreneur, Top Class runs business english courses, training participants to improve their “elevator pitches” – where you sum up what your business or product does in the two minutes you would have someone’s attention while you rode with them in an elevator – as well as how to handle a business lunch, with participants sitting down to a meal, complete with English language menus, learning how to handle deal-making over the dinner table.

“There are over 4,000 startups operating in Israel at any one time, and each year about 1,000 open and close, or get bought out or go public” says Weshler, “so every four years there is virtually a new set of startups.” That there are so many great ideas is testimony to the creativity of the Israeli mind, but that there is so much turnover (most of the thousand definitely do not get to the next stage, says Weshler) shows just how much work is needed on the marketing side. Folks like Weshler, Levy, and Top Class directors Shoshi Gal and Tali Treistman are doing what they can to improve things. “I am a strong believer in the power of the group to help,” Weshler says. “When people get together, there’s no limit to what they can do.”

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Of course, there’s a good reason for that, says Knesset Member Robert Ilatov of the Yisrael Beiteinu party. “Until now, the hi-tech industry was able to hold its own. But with the recent worldwide recession, investment money has almost dried up.” With hi-tech such an integral part of the economy – constituting as much as half of the country’s exports – the government really has no choice but to get involved, at least temporarily, in order to keep the industry alive to fight another day.

Of course, nothing comes for free – and with the government set to become an investor in Israeli hi-tech, entrepreneurs should prepare for at least some strings, if they take the cash, says Ilatov. “Obviously there must be a balance – a comfort level that both the government and private investors and owners will feel comfortable with.” But, he adds, “Like any other investor, the government has a right to ask for conditions from those who benefit from the taxpayer’s money,” he says.

There is a difference between the government and private investors, though; while an angel or VC looks at the bottom line, the government is likely to look at the “greater good” its money can bring about. “It’s not just about the developers and engineers,” Ilatov says. “For every worker in hi-tech there are six or seven supporting workers – the waitresses in the restaurants where they eat lunch, the cleaning staff who prepare the office for the workers, the taxi drivers who take the software people home at night.” If 7,000 hi-tech workers lost their jobs this year, that means some 50,000 other workers  are out of a job, too. Any help the government proffers to the hi-tech industry must go to help those support workers, as well as the elite tech workers, the MK says.

Clearly, Ilatov has done some thinking about the troubles Israel’s hi-tech industry faces – and he has decided to do something about it. Ilatov has established the Knesset’s first Hi-tech Lobby group, which he hopes will bring together government officials, leaders of varied hi-tech industries, university administrators, and members of Israel’s financial community, in order to give Israeli hi-tech a boost in the arm during troubled times.

The first meeting of the lobby saw well over 100 people get together at the Knesset to try and put together an agenda for a plan of action. Amazingly, this was the first time the Knesset saw such a comprehensive discussion of the problems and plusses of Israel’s hi-tech industry, Ilatov told me in an interview later. And, he added, by “hi-tech” he means all the advanced industries Israel is known for – computer networking and security, Web 2.0, biotech, medical devices, cleantech, etc. Representatives of those industries were present at the first lobby meeting, with speakers summing up what their businesses were facing as the recession continues.

Startups and established companies are, of course, just one aspect of the industry, he adds; it all starts in the universities, and maybe even earlier, at the high school level. So, there were also a number of top university officials at the meeting as well, discussing the difficulties faced by computer and science departments in the schools. Fact: The student to lecturer ratio in the country’s computer science departments are among the worst of any department, hovering at about 40:1.

With so many diverse ideas and interests represented, more than an initial exploration of the issues could not have been expected, says Ilatov. “The meeting was very helpful in clarifying a possible agenda, to help us decide what, if any steps to take or legislation to pursue in order to help the industries survive and thrive.”

One of those pieces of legislation is likely to be a rule that will require Israeli pension funds to invest at least some of their money in Israeli hi-tech. “Much, if not most, of the investment and VC money in Israeli hi-tech comes from abroad,” says Ilatov. But pension funds, arguably the Israeli investors with the biggest pockets, have barely given a shekel to local hi-tech, preferring to invest their money in far-flung places, says the MK. If it’s good enough for American VC’s to sink their money into an Israeli startup, Ilatov says, it’s good enough for a huge pension fund to allocate at least some of their funds to the same purpose. “It’s not like it’s any riskier than some of the other things they’ve invested in,” like Central European real estate, Ilatov says. “Americans who invest in Israeli hi-tech get excellent returns, and pension fund investors will as well. We intend to bring up the issue with the heads of the pension funds and try to persuade them that it’s in their, and the country’s, best interests to invest locally. If they agree, that’s fine. But if not, legislation of some sort may be necessary.”

Several other issues were brought up at the meeting: A number of speakers derided a new law that is to be passed as part of the “package deal” between the government and the Histadrut, which gives the union the right to organize among workers in any workplace, including in hi-tech companies (Ilatov thinks this is a bad law, because it will only scare off investors, and won’t help workers, who make far more than the average wage anyway). The names “India” and “China” were mentioned by more than one speaker, the latter for the potential business opportunities available, and the former in the context of the formidable challenge Israel faces in maintaining its position as a hi-tech power. And, there were calls to simplify the investment process, eliminate red tape, and generally do everything possible to encourage foreign investment.

One would have thought that many of these issues would have been hammered out, considering the importance of hi-tech to the country’s economy. But they haven’t, and that’s worrying. Where does one begin? With the universities? Helping existing companies stay in business? Helping fledging startups with great ideas to survive long enough to turn a profit, instead of selling their technology to multinationals for a relative pittance? Do we start with the universities, helping them produce more qualified personnel to fill the great need for top quality people? Or do we try and encourage a love of the sciences in high school and even elementary school students – many of whom, according to one speaker at the meeting, don’t know their multiplication tables as late as sixth grade? Yes, MK Ilatov says. All these areas are important, and we are just going to have to find a way to fund programs to work on all these levels. A tall order indeed, it would appear.

To all those who think being a Knesset member is a cushy job: Take an example from MK Ilatov. I’m sure he didn’t think setting Israel’s hi-tech policy right would be easy, but I’d guess he didn’t realize it would be this complicated. Like Charlie Brown, he has a chance to be a hero, if he succeeds. Let’s not think about the alternative.

“Trade” shows aren’t always the best place to get detailed information about the specifics of a company or a technology, but they’re a great place to get an overall impression of an industry. So it was with this year’s mid-May IVA show, coming after the traumatic financial events that have rocked the world in recent months. No doubt about it – Israeli hi-tech is limping as a result of those events, which have resulted in layoffs and company closures. Venture capital funds, meanwhile have become much more conservative in disbursing their largesse on startups; the performance bar has been set higher, so only ideas with the most merit – as in moneymaking potential – are going to get funded. It makes sense.

In the past, shows have been great places to score fun fan fare – T-shirts, hats, keychains, etc – all those little “status symbols” that show you “know someone” in the business (don’t try to deny you think those trinkets are cool!). But as usually happens in a downturn, the giveaways are the first to go; I was lucky to get business cards out of some people! Clearly, if we are to judge by the “freebie index,” Israeli hi-tech is in a major funk.

Without freebies to pursue at the show, I was forced to pay attention to the presentations and the technology of the companies attending; for balance, I sought out some investors as well (these were far more reluctant to speak than the tech people, of course, and demanded absolute anonymity). Thus I was able to gage the opinions of several people on the investing side of things, including one (very) heavy-hitter.

To tie these diverse observations together: It’s possible that next year’s freebie index will be somewhat improved, as investors are itching (at least one told me) to get back in the game, and if the recent good news on the stock markets continues, investors will feel more confident to invest in some of the technologies that clearly are going to have a major impact on the way we live, when they finally come to market. And those technologies are definitely worth investing in!

First, the technologies: At the show, I spent a lot of time in the area called the “Startup Pavilion,” where the real bootstrap companies hang out (as opposed to the more established startups that were presenting in the show’s sessions). Among the very cool companies I came across were: InphoDrive (http://inphodrive.com/), which is developing a voice-driven “infotainment” system for vehicles that will make driving safer; MobileRL (http://www.mobilerl.com/), which has a product that lets advertisers and media researchers determine with much greater accuracy the effectiveness of their campaigns; Leviathan Energy (http://www.leviathanenergyinc.com/), which believes that wind is a much better bet for alternative energy production than are solar photovaltic systems; and BioSpiral (http://www.biospiral.com/), with a technology that uses cooling & heating technologies to destroy prostate cancer, without need to resort to a knife.

I may have summed up their ideas in a line (because of space considerations), but rest assured that all four of these companies – plus numerous others – are doing unique stuff; VC’s would already have pumped millions into these and other technologies if this were 2007 (I intend to profile many of these companies in future articles). But 2009 isn’t 2007, as so many of us have found out in recent months (it should be noted that a number of these companies have products and services that are ready for market, and some are even working on ‘big deals’).

While trying to secure funding for a great technology nowadays is perhaps harder than it’s ever been, being an investor in times like these is no picnic either. VC’s are in business to make money, not lose it – hence their conservatism in matters fiduciary at this juncture. The investors just aren’t handing over the money the way they used to. But what are their alternatives? Sticking the money in the bank for a grand 1% return? It works for awhile, several investors have told me, but banking investment money is not a long-term strategy; they didn’t get where they are today by avoiding risk. Just the opposite.

This is where the strategy being pursued by many governments around the world, which are pumping money into the local economies, comes in handy, one major investor told me. “A trillion dollars is big money,” he said, referring to the potential deficit in this year’s U.S. budget, “and there’s certainly a risk of inflation. But it’s helping to build confidence, without which investors are just going to be too scared to invest in hi-tech. And we do want to invest in hi-tech, especially Israeli hi-tech, because Israel has traditionally had some of the most important startup technologies anywhere.” Among the people I spoke with were representatives of the New York Stock Exchange/EuroNext, who told me there were four IPOs so far this year on their global exchange. Considering where we were last October, it’s a good sign – and hopefully augurs a change for the better.

When things turn sour, it’s customary for pundits to push the “grim slide” theory – that things are bound to get worse. But keep in mind that some of the greatest innovations were actually first sold or marketed during recessions and depressions (http://tinyurl.com/cuwt8m). Sooner or later things bounce back – and no doubt some of the technologies that are going to be poised to help turn things around were right there at the IVA show. And I expect some cool freebies when those companies do start making it big.

In an exclusive Yom Ha’atzmaut interview with the Jerusalem Post, Oron says he is decidedly optimistic about Israel’s hi-tech future. In fact, he says, “the consensus seems to be that by the beginning of 2010, companies will begin to see significant growth in revenues, that will be translated into financial performance several quarters later.” And that growth, says Oron, will be strong enough to “raise the boats,” fueling development in all facets of Israeli hi-tech – and not just in the hot areas of cell communication or Web 2.0 applications, but in “traditional” areas of IT development – bringing back in its wake the hi-tech jobs that were lost during the current downturn, and then some.

Oron has been working with Israeli hi-tech companies for decades. He was, among other things, President and CEO of Aryt Industries; Co-Founder, President and CEO of Reshef Technologies; Co-Founder and Chairman of Telegate Ltd; and former chairman of the Israel Venture Association (http://www.iva.co.il/). Among his fund’s recent successes was the acquisition of anti-fraud solutions provider Actimize (http://www.actimize.com/), since acquired by Nice; semiconductor maker Siliquent, acquired in 2005 by Broadcom (http://bit.ly/195gPF); and optical measurement solution provider Cognitens (http://www.cognitens.com/), acquired in 2007 by Hexagon. Plus, he’s brought many companies to market with successful IPOs. He’s seen companies come and go, and helped businesses thrive through good times and bad. And, Oron says, while there is what to worry about, the overall picture is better than most people realize.

“One needs to differentiate between the market for tech products and services, and the funding sources available to hi-tech developers,” Oron says. Echoing the sentiments of many economists and experts, Oron says the problem is more one of Wall Street than Main Street. “The large U.S. tech companies like Apple, Microsoft, and the cellphone producers and service providers are doing OK, with sales down at most 5% or 6% overall. Lower sales in the U.S. and Europe are being compensated for by steady demand in Asia. We have a similar situation in Israel; it’s not that demand for products has evaporated, it’s the financing for fledgling companies that is hard to come by.” While most of us are familiar with the credit crisis at the banks, VC and angel funding is extremely weak as well, Oron says – and the investment markets is basically treading water. “The financing food chain for startups is on the verge of collapse. One hopeful sign is that we have seen some activity in the mergers and acquisitions area recently, but overall, tech companies that have only their ideas and patents as assets are suffering,” Oron says.

With that, Oron says he has become much more hopeful in recent weeks – after speaking to high officials in the Finance Ministry regarding the government’s business bailout plan, announced last week. “The message is very clear that the people currently running the Treasury ‘get it,’ and their plan should help ease access to money for many startups. In addition, the government plans to significantly increase – perhaps double – the Chief Scientist’s development budget, meaning that many more companies will have access to development funds.” It’s the first comprehensive government response to the crisis, and it’s a good one, he says. “It’s a serious plan that should accomplish what it is setting out to do.”

And what projects, in his opinion, should the Chief Scientist be funding? Where are the strong growth areas going to be when things do bounce back? “Everything,” says Oron. “There is going to be huge demand for everything Israel specializes in, from broadband backbone to audio technology to last mile wired to wireless. Those who say that there is no need for many of the traditional technologies Israel has specialized in are just not aware of what is going on out there. Already there is a huge demand for technologies that can handle the heavy bandwidth necessary for the heavy internet traffic generated by online video. This market, along with many others, will continue to show strong growth, and it is in these traditional IT areas that Israel has a strong presence.”

Israel’s medical technology providers will also see strong growth, Oron says, while cleantech/greentech is likely to have less of an impact on local growth than many expect. “Much of the IT work being done by private companies trickles down from research and work being done for the IDF,” Oron says, “so we have a built-in market to produce for – something that doesn’t necessarily exist for cleantech applications.” That’s not to say there won’t be growth in that area as well, says Oron – but the areas that Israel has excelled in for years will continue to be just as important, if not more so, for local companies.

And despite rumors to the contrary, Israel’s technology base and innovative drive is as strong as ever. Commenting on the latest doom and gloom rumor – that China is somehow supplanting Israel as a world center of innovation – Oron says that nothing could be further from the truth. “I have been in this business for many years, and every little while someone comes up with a similar idea, that Israel is losing its edge. Everyone we speak to – world class investors, people from Silicon Valley, the elite of IT – who looks at the business plans, technologies, and business models of Israeli companies comes away highly impressed. I won’t say we don’t have some weaknesses when compared to China or India, but losing our innovative edge is definitely not one of them.”

And with all that expected growth, says Oron, those who were laid off this year have a good chance of getting a job – perhaps even their old job – next year. “The layoffs have not been uniform – we’ve been seeing two kinds of layoffs in recent months,” Oron says. “While everyone is cutting back, those working for local branches of multinationals are being more badly affected, since the multinational tends to protect workers in their home country, preferring to sacrifice their foreign satellites. But that’s this year; soon, hopefully by next year, the tech sector will be perhaps the world’s fastest growing sector. Based on the amount of data being generated and the services currently available to fulfill those needs, it’s quite clear that the market demand will be strong. And when the financial markets come back and funding is available, growth will be as strong – and probably stronger – than it has been in recent years.” It’s an optimistic forecast – but as someone in a position to know, Oron’s optimism can give all of us hope that next Yom Ha’atzmaut will be a lot happier for many more Israelis!

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.