The following excerpt, taken from “The Global Startup Ecosystem Report 2012”, summarizes the current status of the Israeli Hi-tech market:

As a country, Israel may be only 60 years old and have a population of around 7 million but it has the highest density of tech startups in the world. In 2009, 63 Israeli companies were listed on the tech-orientated NASDAQ – which is more than Europe, Japan, Korea, India, and China combined. Almost every major tech company today has some kind of subsidiary in Israel, including Intel, Microsoft, Google and Cisco, to name just a few. Consequently, 39% of Israeli high-tech employees work in the R&D departments of multinational companies.

In the Startup Ecosystem Index, Tel Aviv ranks second globally, because it has the second highest output index of startups with a healthy funnel of startups across the developmental lifecycle, a highly developed funding ecosystem, a strong entrepreneurial culture, a vibrant support ecosystem and a plentiful supply of talent.

Tel Aviv has an impressive history of entrepreneurship and the ecosystem is still expanding. Yet although we gave it the ranking of Expansion: Sustaining, there are some warning signs that they may enter the ossification stage of expansion sometime soon. Technology startups tackle two kinds of risk: technology risk and market risk. And the Tel Aviv ecosystem is highly dependent on small technology-driven exits, rather than on big market winners.