Forget about chutzpah…the tech sector in Israel has two advantages: a skilled workforce and boatloads of risk-capital. This has made Israel (population, 7 million), the number three country in the world for venture capital. Last year, investors ignored weak global IPO and M&A markets and poured $1.2 billion into 391 start-ups. This approach worked very well in the past, only the US has more NASDAQ-listed companies. Unfortunately, that party ended abruptly with the 2008 financial crisis. Based on fundraising and exit activity as reported by IVC, the Israeli venture sector is undergoing dramatic, and painful, change.

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