Main Facts: The Rise of Protego Ventures and Defense VC
The traditional boundaries separating military defense from private venture capital have fundamentally dissolved. Once viewed by Silicon Valley and global investors as an ethical gray area or a bureaucratic labyrinth, the defense technology sector is experiencing an unprecedented gold rush. Defense tech venture capital dealmaking shattered historical records in the first quarter of 2026, driven by escalating geopolitical tensions, rapid advancements in autonomous systems, and a surging global demand for modern military hardware and software.
Amid this global realignment, specialized venture capital firms have materialized worldwide, dedicating themselves entirely to dual-use and defense technologies. Among the most prominent is Protego Ventures, a pioneering, two-year-old Israeli firm that has firmly established itself as the country’s first and largest dedicated defense tech venture capital fund.
In a milestone announcement for the regional startup ecosystem, Protego has officially completed the final close of its debut fund, securing $125 million in capital commitments. Led by female co-founders Lital Leshem and Lee Moser, the firm is strategically positioned to write checks ranging from $5 million to $50 million per company. Protego’s core mission focuses intensely on identifying and scaling startups that address the critical security and defense needs of Israel and the broader global community.
However, what makes Protego’s final close particularly fascinating is that the firm intentionally stopped short of its initial $150 million target. Buoyed by early successes—most notably portfolio company XTEND, a pioneering drone manufacturer that debuted on the New York Stock Exchange earlier this month—Protego realized that a slightly leaner fund would dramatically maximize returns for its limited partners. With XTEND shaping up to be a potential "fund maker" (a single investment capable of returning the entire capital pool), the founders chose to cap the fund size to prevent diluting the upside among an overly broad investor base. As Leshem concisely put it, "Nobody wants to share the pie."
Chronology: From the October 7 Catalyst to Record-Breaking Deals
To understand the rapid ascent of Protego Ventures and the broader transformation of Israeli defense tech, one must trace the timeline of recent geopolitical and economic history.
Pre-2023: The Great Divide
For decades, traditional venture capital firms largely avoided defense investments. Institutional investors often cited ESG (Environmental, Social, and Governance) constraints, while founders preferred the massive, frictionless consumer markets of SaaS, fintech, and e-commerce. Israel possessed a thriving cybersecurity and intelligence-adjacent tech scene, but it was largely funneled into enterprise software rather than tactical battlefield hardware.
October 7, 2023: A Paradigm Shift
Everything changed on October 7, 2023, following the Hamas attack on Israel. The nature of the conflict instantly exposed a chasm between legacy military doctrines and the realities of modern, asymmetric warfare. Lital Leshem, a military veteran with 11 years of experience in defense and intelligence, was deployed as a reservist on the very day of the attacks—while heavily pregnant.
Serving on the front lines until days before giving birth, Leshem witnessed firsthand how the battlefield was operating vastly differently than it had over the preceding decade. At the same time, global financial powerhouse Ares Management recognized the urgent necessity for private capital to scale technological innovation within Israel’s defense apparatus. Ares approached Leshem and Lee Moser, urging them to join forces and establish a dedicated vehicle. Ares backed this vision with a substantial $30 million anchor investment as a limited partner, providing Protego with the immediate financial muscle required to deploy capital rapidly.
2024–2025: Rapid Deployment and Exits
Over the next two years, Protego moved quickly. It built a lean, high-impact portfolio featuring innovators like XTEND and ASIO, a situational awareness systems developer that later forged a strategic partnership with American defense tech giant Anduril. Meanwhile, the startup ecosystem saw massive liquidity events, including the acquisition of Carbyne (co-founded by Leshem) for $625 million in 2025.
Q1 2026: Setting Records
By the first quarter of 2026, defense tech VC dealmaking hit an all-time high globally. Capitalizing on this momentum, Protego officially finalized its $125 million debut fund. Simultaneously, portfolio company XTEND successfully completed its public listing on the NYSE, validating Protego’s thesis that specialized, high-conviction defense investments could yield monumental financial returns alongside strategic national security impact.
Supporting Data: Numbers Behind the Defense Tech Boom
The transformation of defense venture capital is underscored by compelling quantitative metrics across the global and Israeli markets:
- $125 Million: The final committed capital of Protego Ventures’ debut fund, secured just two years after the firm’s inception.
- $5 Million to $50 Million: The target investment ticket size Protego deploys into individual high-potential defense startups.
- $150 Million vs. $125 Million: Protego’s original fundraising target versus its final close. The intentional reduction was designed to preserve concentrated upside for investors following the blockbuster trajectory of portfolio companies like XTEND.
- $30 Million: The anchor investment provided by Ares Management, enabling Protego to begin active deployment immediately after its founding.
- $33 Million: The total amount in state-backed guarantees recently awarded by Israeli authorities to competing VC firms Adir Capital and Sling Capital to drive next-generation military and dual-use tech investments.
- $625 Million: The acquisition valuation of Carbyne, a startup co-founded by Protego co-founder Lital Leshem, prior to her transition into full-time defense venture capital.
Official Responses and Industry Perspectives
The convergence of institutional finance and military technology has elicited strong reactions from founders, investors, and military leaders alike.
Lital Leshem highlights that the reception within military circles has been overwhelmingly positive, characterized by deep mutual respect. "On the military side, there is a lot of respect, and people are coming—even under the radar—to talk to us, to learn from us, to train with us, and for sure get our technology and innovation," Leshem noted.
Behind the scenes, the structural strength of Protego relies on the complementary skill sets of its co-founders. Lee Moser brings deep expertise as a seasoned venture capitalist and maintains her role as a managing partner at the generalist VC firm AnD Ventures. Lital Leshem combines tactical battlefield experience from her military intelligence career with entrepreneurial success, having navigated the startup trenches through to massive exits.
From the institutional perspective, financial backers like Ares Management saw an immediate imperative following late 2023 to bridge the gap between commercial venture capital and sovereign defense needs. By encouraging Leshem and Moser to spearhead Protego, Ares helped institutionalize a pipeline for dual-use technologies that protect democratic nations against evolving asymmetric threats.
Implications: The Future of Israel and Global Defense Tech
Protego Ventures will not have the landscape to itself for long. The broader Israeli government has actively recognized the strategic necessity of private-public partnerships in military technology. State authorities recently awarded roughly $33 million in state guarantees to local venture funds like Adir Capital and Sling Capital to stimulate investments in next-generation defense and dual-use capabilities, with several other funds actively raising capital for similar mandates. (While Protego was too advanced in its own fundraising cycle to participate in the government’s tender, the macro trend clearly favors a crowded, competitive market for military innovation).
Looking ahead, Protego is already mapping out its next phase of expansion. The firm is preparing to launch its second fund in the first quarter of 2027. This upcoming vehicle will feature a broader geographic scope, incorporating institutional capital from Israeli sources alongside a major U.S. financial commitment already secured by Leshem. Fund II will deliberately expand its investment mandate to target early-growth American defense-tech companies alongside Israeli innovators, reflecting the increasingly global, interconnected nature of modern defense supply chains.
Strategic Takeaways for the Venture Ecosystem
- The "Fund Maker" Effect: Protego’s decision to cap its fund size demonstrates a maturing venture strategy in defense tech. Unlike software funds that rely on spray-and-pray portfolio construction, defense tech often hinges on massive, category-defining exits (such as XTEND’s NYSE listing), where concentrated ownership yields outsized returns.
- Dual-Use Normalization: The stigma once attached to military tech investments has effectively evaporated. Institutional limited partners—traditionally wary of geopolitical or ethical controversies—now view defense tech as a mandatory hedge against global instability and a cornerstone of sovereign resilience.
- The Veteran Advantage: Founders like Leshem, who possess direct, contemporary operational experience on the battlefield, provide an unmatched edge in evaluating early-stage defense technologies. They understand procurement pain points, tactical integration hurdles, and the actual utility of hardware under fire in ways that traditional, spreadsheet-driven venture capitalists cannot replicate.
As global security dynamics continue to shift through 2026 and beyond, firms like Protego Ventures are proving that private capital and cutting-edge startup agility can successfully modernize the defense apparatus of democratic nations—transforming battlefield survival into a thriving, high-growth asset class.
rifanmuazin
Nana Muazin
