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(1) We consider here cluster in a broad perception including a wide range of technologies with in the ICT area.

(2) Therefore, in this paper we will mark as successful exits only IPOs and Trade Sale.

(3) The concept of dominant design is a collection of stable product standards, which are accepted by the majority of the industry producers. According to Abernathy and Utterback (1978), the emergence of the dominant design represents a significant turning point for the industry's development.

(4) This reduce in risk taking and innovativeness is related to several factors such as the fact that the main LPs in this stage are institutional investors, the fact that in this stage a clear benchmark exist therefore the penalty for under- performance is high, and the over reliance on past success factors.

(5) Informal data (not in the table), based on the data on VC fundraising by Israeli VCs from 1985 to 1990 (less than $50M) and the fact that foreign VCs were not active during these years in Israel.

(6) After VC emergence in Israel, the Israeli VC market became strongly linked to the global VC market (mostly to the US VC market), therefore the significant growth of VC activity in Israel during the years 1999-2001 is related to the significant growth in the US VC market.

(7) Similarly, the Israeli VC represented 6.9% of the European VC investment in 1996, it grew to 9.5% of the European VC investment in 1999 and to 22% of the European VC investment in 2007.

(8) The year 2000 represents an exception--due to the bubble and the extensive entry of new VC companies during 1999- 2000 period, the competition became very aggressive, thus VC had to be much more innovative and risk-taking.

(9) In 2002 the VC industry key agents understood that if seed investment will stay in the current low levels, the industry would be destructed and decided on informal collective agreement to increase seed investment.

(10) The reason we present percentages and not absolute figure is because we suggest that while the VC industry and the startup segment of the high tech cluster are still growing there is a bottleneck in the early stage investments--the effects of this bottleneck seen about 3-5 years after they are created (when there are fewer opportunities for mid-late stage investments) and they may be expressed in lower quality late stage investment (due to fewer investment opportunities and thus less selectivity in investment).

(11) In Tables 7-8 we compare two periods 1997-2000 and 2004-2007, which represent the growth phase and the mature phase, respectively. We intentionally ignore the bust years (2001-2003) that are not representative.

(12) In Tables 7-8 we compare two periods 1997-2000 and 2004-2007, which represent the growth phase and the mature phase, respectively. We intentionally ignore the bust years (2001-2003) that are not representative.

GIL AVNIMELECH

Post-Doctorate Student, Leon Recanati Graduate School of Business Administration, Faculty of Management, Tel Aviv University, Israel

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