Were a time machine available, and it was possible to skip this year and jump straight to 2010, the target date for the start of an economic recovery, many CEOs, entrepreneurs, venture capitalists, and angel investors would climb on board without a moment's hesitation. Israeli high tech is waiting for 2010, and would rather forget about 2009, especially now .

It is not as if there were any great hopes for 2008, but reality was even worse than expected for global and Israeli high-tech industry. It was already clear in late 2007 that things were not going well, and that they were going to get worse.

Despite the US mortgage crisis and the collapse of the dollar, it was still possible to see Nasdaq IPOs by Israeli high-tech companies around 2007: Allot Communications Ltd. (Nasdaq:ALLT), BigBand Networks Inc. (Nasdaq:BBND), and Voltaire Ltd. (Nasdaq:VOLT). However, they were the last companies that went public, and it would become apparent during 2008 that they did not fulfill the hopes placed in them.

In early 2008, the door to the primary market slammed shut. The words "exit strategy" became meaningless as the mergers and acquisitions market also shut down. It is no wonder that the mood for 2009 is bleak indeed.

Last summer, some people believed that the hard times were fleeting. They did not seriously take the domino effect into account. The collapse of Lehman Brothers in September changed the tune and put Israel's high-tech industry into crisis mood. As in the US and Europe, everything in Israel ground to a halt.

Figures for 2008 will show a flat a year of exits; i.e. investment in companies equaled revenue from the sale of companies. $1.25 billion was invested in Israeli start-ups since the beginning of 2008 compared with $1.2 billion from the sale of start-ups.

According to IVC Online, Israeli high-tech companies raised $1.68 billion in January-September 2008, 34 percent more than the $1.25 billion raised in the corresponding period of 2007.

The problematic figure is that, despite the record investment, only 28 percent of it flowed to new companies. In other words, there was more money than ever, but as far as risk was concerned, investors played it safe. In any event, we are unlikely to see another record year for investment anytime soon.

In contrast to previous crises, Israeli high tech reacted quickly to the pending signs and companies fired a tenth to a third of their staff. This time, the axe was wielded without hesitation, as if Israeli high tech had practiced the maneuver beforehand.

Since October, start-ups and publicly traded high-tech companies have fired almost 3,000 employees. As painful as this is, it comes nowhere near the harsh reality in the US, where more than 100,000 high-tech employees have lost their jobs since August. The fact that few new companies are being founded, which could provide alternative employment, makes the situation even worse.

Regrettably, 2009 is no better on the job front. Wave upon wave of layoffs have hit during the first quarter, along with the closing down and serious restructuring of companies.

IVC data indicates that more than 120 companies at various stages have closed 2008. This is actually not so threatening: 247 companies closed in 2007; at the height of the last high-tech crisis, 367 closed in 2001 and 434 in 2002. In other words, things could be a lot worse.

IVC Online adds that nine companies are currently undergoing liquidation. The most noteworthy of which is chipset developer Negevtech Ltd., which obtained a stay in proceedings in an effort to find a buyer for its intellectual property. The fate of the company's 136 employees has already been decreed; their layoff notices came into effect at the beginning of December 2008. The Rehovot-based company, once one of Israel's most promising firms, raised $98 million, but is now moving towards its end.

Looking forward, it's hard to keep optimistic and assume that 2009 will see more improvement. Instead, this year is likely a type of judgment day, and many firms have not be judged favorably. Even if the number of closings is unexpectedly small, it will nevertheless not likely improve morale in industry. The mood is bleak in the high-tech and venture capital industry, and its representatives have already asked the government for support, a safety net of their own as it were.

To see more of the Globes or to subscribe to the newspaper, go to http://www.globes-online.com.

Copyright (c) 2008, Globes, Tel Aviv, Israel

Distributed by McClatchy-Tribune Information Services.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.