Israel's Xenia Venture Capital is an early-stage technology incubator with an unusual model for getting medical technologies out of the nest and on the wing.

Israel's biotech industry -- a scientific and entrepreneurial dynamo but starved for capital, infrastructure, and managerial experience -- is facing its existential dilemma. For some, the industry's current problems are merely a reflection of economic Darwinism; others are planning more radical financing innovations. Meanwhile, the relatively rich in Israel, some of the incubators like Clal, and especially the country's biggest company, Teva, are soaking up the available opportunities for relatively little money.

Teva is keeping the Israeli biotech industry alive -- while Big Pharma by and large ignores its technological riches. But without some competition for financing and development support, the industry is hardly likely to flourish. The disastrous case of Proneuron and its IP on Copaxone, Teva's biggest drug, highlights the problems for Israeli start-ups when one company dominates the partnering scene.