Israel is a funny place: a third world country in many aspects, and on the other hand, a HighTech super power ...
some Israeli web 2.0 companies, not mentioned in previous answers, are:
matchactivity.com, viewscore.com, esnips.com, supportspace.com, fixya.com, inter8ing.com, velingo.com, spotback.com, velingo.com, spearcast.com, ilcu.com, myheritage.com, rawsugar.com, kasamba.com, beinsync.com, alltogather.com, beinsync.com
What do you mean third world country??