When Sequoia Capital launched its first fund outside the US in 2001, rather than open a plush office in London's Mayfair, it opted to create a $150m (€121m) early-stage fund based in Herzliya, home to a cluster of Israeli venture capitalists. The fact that a top-tier venture capitalist house should choose to bypass Europe and place three of its 16 partners in a war-torn country, almost a year after the dot-com bubble had burst, is a testament to the importance of the Israeli technology industry.

With 73 Israeli companies listed on Nasdaq, the country has the second largest number of quoted companies on the index behind the US. Since 1999, Israeli companies have raised $4.3bn in the US through public offerings and $777m in Europe, according to the Israeli Venture Capital research centre. Since 1996, Israeli high-technology companies have been responsible for $20.5bn in mergers and acquisitions, including $10.5bn in 2000 at the height of the technology asset bubble.