On the face of it, it doesn’t look like a good time to be a Russian venture capitalist.

Global high-tech is awash in money and exciting developments are happening in cloud computing, mobile telephony and the so-called Internet of things, to name a few. But Russia’s economy is hurting badly amid Western sanctions and collapsing oil prices. Moscow is fighting a pseudo-war with Ukraine, which has made Russian businessmen and investors unwelcome in Europe and America.

But Russian venture capitalists are not deterred. They see a little silver lining in Russia’s economic woes and Israel as a place still open to investment and collaboration.

“In the middle of [2014] Russia had already come under sanctions, so the U.S. and parts of Western Europe became closed to Russian investment. Russian money isn’t welcome in the U.S. for sure, the U.K. or Germany either, so Israel was a natural direction,” says Alexander Turkot, founder and managing partner of Maxfield Capital. That company, two-thirds of the way into a second $100 million closing, has already invested in three Israeli startups — DialMyApp, LogDog and SpeakingPal.

Turkot calls the negative attitude toward Russia in much of the West “exaggerated” and likens Russia’s image problems to Israel’s. Born in Tashkent, Turkot has been shuttling back and forth between the two countries as well as the United States since he immigrated to Israel in 1990.

“In Israel, we understand the problem more than anywhere else in the world,” he says. “Things aren’t so black and white.”

Maxfield, which is based in New York but conducts most of its operations in Moscow, was formed in 2013 after Turkot’s two-decade odyssey solving Y2K problems and working for Rupert Murdoch’s early stab at social media with MySpace.

He also worked for the Skolkovo Innovation Center, a government initiative to create a Russian Silicon Valley. Maxfield’s portfolio contains about 17 companies in Russia, the United States and, in the last year, Europe, in addition to Israel.

Actually, Russian VC investment in Israel has cooled in the past year, not because of sanctions or a lack of interest, but because of Russia’s economic woes. When the economy and stock market were booming as recently as two years ago, entrepreneurs and oligarchs had money to put into Russian startups. Some of those funds seeped over the border to countries like Israel.

Looking overseas

The glitter is gone, but Alex Chachava, managing partner of Moscow-based Leta Capital, says this has made it easier for VC funds like his because valuations have fallen and competition for deals has declined. In any case, he adds, “Russian entrepreneurs and oligarchs still have a lot of money. Investment in startups is more profitable and more interesting. We’re seeing a lot of new funds.”

One reason is that the sagging ruble has cut development costs. “A year ago my senior software developer had a similar salary as an Israeli developer,” Chachava says. “Now he’s much cheaper. As most of our startups sell worldwide, we’re more price-competitive.” The slack economy means Russian companies have to look to overseas markets.

Leta, with revenues of about $100 million a year, grew out of a technology group by the same name that Chachava launched 11 years ago doing systems integration and software development in Russia.

“Three years ago we started thinking about what we could do next,” he recalls. “We were still a local company and we wanted to become international. The brainstorm was to establish a venture fund.”

Leta now does about three or four investments a year and has about 10 companies in its portfolio, nearly all of them in Russia and Ukraine. Ukraine?

“It's kind of crazy, but we have a lot of partners in Ukraine,” he says. “I think the biggest problem is on a government level, but on a business level we’re doing business and collaborating . We understand that it’s not our war.”

Either way, Russian venture capitalists have good business reasons to put some of their money in Israeli startups. “Every time I’m [in Israel], I arrange to meet 10 or 12 companies,” Turkot says. “There are other deals up to the due-diligence stage, and I hope to close them soon.”

Chachava, whose fund has invested in the Israeli mobile sports application company 365Scores, notes that unlike their American and European peers, Israeli startups address the global market from the start. After all, they have almost no market to address at home.

He also likes the proximity of Moscow to Tel Aviv, at least in terms of the time zone. “We analyzed investments in the U.S., but the U.S. is 10 hours from us,” he says. “We want to work with startups, not just put money in them, so we have to be in a similar time zone. That’s why we deiced not to invest in the U.S. and Asia.”

Just hop on a plane

Israeli startups have a more promising route to exit than the Russian companies that make up the vast majority of the Russian VC portfolios. The decline of the Russian stock market makes an initial public offering almost impossible, and the absence of giant tech companies in Russia like Google and Apple makes it hard to get acquired.

“It’s impossible to sell Russian companies to American companies because of the politics,” Chachava says. “It’s not like Israel . Everyone knows Israeli startups can be sold to American companies at a very good price.”

Turkot adds that visa-free travel for Russians to Israel is another factor. “For a Russian to obtain a visa for Europe is sometimes a big deal,” he says. But time is especially money in the fast-paced world of high-tech. “If you can’t do it in 24 hours, it’s a forgotten story.”

Russian VCs tend to have a strong technology bent, unlike the financial and market orientation of many U.S. funds. For that reason, they find the technology focus of Israeli startups a better fit, explains Dmitry Chikhachev, a co-founder and managing partner at Moscow-based Runa Capital.

Just over a year ago, Runa invested in the Israeli startup Cellrox, whose technology allows dependent and secure virtual environments on a single mobile device. The reason was because Cellrox’s technology was similar to that being developed by a company started by one of Runa’s other partners, Serguei Beloussov, who has a doctorate and 20 years of entrepreneurial experience.

“Our specialty is that we’re engineers and we have a lot of people around us who understand technology and can dig into complex technology,” Chikhachev says. “We were one of the few VCs that could understand what they were doing.”

Chikhachev has a degree in applied math and physics, but spent most of his business career with a gaming company and then headed a vending-machine business spun off from it. He teamed up with Beloussov and raised $135 million in 2011 for Runa to focus on cloud computing.

But cloud computing by nature is global and Runa’s partners realized they couldn’t limit their scope to Russia. Today about half its portfolio is in Russia and the rest is spread among 10 other countries. Runa recently took on an American partner, Peter Bauert. It has $185 million under management and began raising capital last year for a second fund that could reach $200 million.

Runa passed on a couple of Israeli startups as investments last year, but now he’s back. “I’m here to restart the process,” he says.

Coming to Israel certainly had its benefits for Russian VCs, but what can the funds offer Israeli startups?

The competition to fund startups is intense these days. American VCs are in Israel aplenty, Israeli funds are growing again after a long slump, corporate investors and private equity funds are pursuing startups, and Chinese investors are investing in the Startup Nation.

Chachava says there’s a niche for Russian funds. One is providing an entrée to the Russian and Eastern European markets and, in the case of Leta, tapping its companies’ customer base. “If an Israeli startup has a security software product, we can test it with 100,000 users,” he boasts.

Turkot did something like that for an Israeli startup he declined to identify because the deal had not yet been completed, by acting as a go-between with a big Russian company to put the Israeli firm’s software in its product.

“It’s the first practical deployment of their program, which will give them hundreds of thousands of users,” he says. “That will make it easier to go to Samsung or LG later.”