The intersection of venture capital and military technology has undergone a profound transformation, moving from the periphery of institutional finance to the absolute forefront of global capital allocation. Driven by shifting geopolitical landscapes, modern conflict dynamics, and rapid advancements in dual-use technologies, defense tech venture dealmaking achieved record-breaking figures in the first quarter of 2026, according to recent industry reports from PitchBook. This paradigm shift has catalyzed the formation of specialized venture capital firms worldwide, established with the singular mandate of funding early-stage startups capable of addressing next-generation security challenges.
Among the pioneers of this movement is Protego Ventures, a two-year-old firm that has successfully completed the final close of its inaugural fund, securing $125 million in capital commitments. Recognized as the first and largest dedicated defense technology venture capital firm in Israel, Protego is strategically positioned at the nexus of technological innovation and national security. Led by general partners Lital Leshem and Lee Moser, the firm is deploying capital ranging from $5 million to $50 million per company, targeting high-growth startups designed to reinforce the security postures of Israel and its global allies.
The Genesis and Catalyst of Protego Ventures
The origins of Protego Ventures are deeply intertwined with the geopolitical shockwaves of late 2023. In the immediate aftermath of the October 7, 2023, Hamas-led attacks on Israel, global investment giant Ares Management recognized an urgent, structural need to modernize Israel’s defense apparatus through private sector innovation. Ares proposed that Leshem and Moser join forces to establish a specialized vehicle dedicated to defense technology.
To jump-start the initiative, Ares Management anchored the fund with a substantial $30 million investment as a limited partner, providing Protego with the immediate dry powder required to execute deals in a high-urgency environment. This institutional backing allowed the firm to bypass traditional fundraising friction and immediately begin supporting critical national security startups.
The founding duo brings a rare combination of frontline military experience and venture capital acumen to the table. Lital Leshem is an eleven-year veteran of the Israeli military and intelligence apparatus who previously co-founded a technology startup successfully acquired by Axon for $625 million in 2025. Her firsthand perspective was forged quite literally on the front lines: on October 7, 2023, Leshem was deployed as a military reservist while pregnant, serving through her final trimester.
"Everything changed on October 7," Leshem recounted, reflecting on her time in active service up until entering the delivery room. "Witnessing and getting the first-row seat to how the battlefield acted differently from what I knew in the past decade" deeply influenced her conviction that asymmetrical, software-driven, and autonomous systems would dictate the future of national defense.
Co-founder Lee Moser complements this operational and intelligence background with deep-seated expertise in traditional venture capital. Moser maintains her role as a managing partner at AnD Ventures, a prominent generalist Israeli venture capital firm, enabling Protego to leverage an expansive, established network within the broader technology ecosystem.
Strategic Fund Sizing and Portfolio Highlights
Rather than bowing to pressure to maximize assets under management, Protego deliberately capped its debut fund at $125 million, stopping short of an initial $150 million target. This decision was driven by the early, high-impact success of the firm’s inaugural portfolio company: XTEND, an advanced developer of operational drone systems.
Earlier this month, XTEND achieved a major market milestone by going public on the New York Stock Exchange (NYSE). Because of this outsized early win, Protego recognized that a smaller fund size significantly magnifies the return multiple for its limited partners. With XTEND tracking as a potential "fund maker"—a rare investment capable of single-handedly returning the entire capital commitment of a fund—diluting that upside across a larger pool of capital was deemed counterproductive. As Leshem succinctly put it, "Nobody wants to share the pie."
Beyond XTEND, Protego’s early portfolio reflects a targeted focus on situational awareness, artificial intelligence, and autonomous robotics. This includes strategic investments in companies like ASIO, an innovator in advanced battlefield situational awareness systems that has already secured high-profile collaborative partnerships with American defense tech titan Anduril.
According to firm leadership, the reception within traditional military and defense circles has been overwhelmingly positive. The unique positioning of Protego as an insider-led, specialized fund has bridged the historical gap between risk-averse military procurement offices and agile, venture-backed startups. "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.
The Competitive Landscape and Government Intervention
Protego will not enjoy a monopoly on Israeli defense innovation for long. Recognizing the critical importance of private capital in scaling national security technologies, the Israeli government and state authorities have initiated targeted programs to stimulate the sector. State-backed entities recently awarded approximately $33 million in government guarantees to venture firms Adir Capital and Sling Capital to drive investment into military and dual-use technologies, alongside several other independent funds currently raising capital.
While Protego was too advanced in its fundraising cycle to participate in the government’s specific state-backed tender, the broader proliferation of defense-focused capital highlights a structural shift in the region’s venture ecosystem. Navigating the Israeli defense market historically requires deep institutional access, technical clearance, and extensive networks—barriers to entry that have historically kept generalist venture capitalists at bay. By leaning into their combined military intelligence and financial networks, Leshem and Moser have successfully established a first-mover advantage.
Looking Ahead: Fund II and Global Expansion
With its inaugural fund successfully closed and deployed, Protego Ventures is already looking toward its next phase of institutional growth. The firm is actively planning the launch of its second fund, slated for the first quarter of 2027.
This upcoming vehicle is expected to feature a broader investment scope, expanding beyond early-stage Israeli innovations to actively target early-growth American defense technology companies. Protego has already secured key anchor commitments for Fund II, including a substantial allocation from a major U.S. institutional investor alongside continued participation from Israeli institutional backers.
Implications for the Global Defense Tech Ecosystem
The successful close of Protego’s $125 million debut fund, paired with the successful public debut of portfolio company XTEND, underscores a broader structural transformation in global venture capital. Historically, environmental, social, and governance (ESG) mandates and traditional institutional risk frameworks heavily restricted venture funds from investing in military applications, weapons systems, and lethal autonomous technologies.
However, escalating geopolitical tensions in Eastern Europe, the Middle East, and the Indo-Pacific region have forced a systemic re-evaluation among global limited partners, including university endowments, pension funds, and sovereign wealth entities. Dual-use technologies—innovations applicable to both commercial and defense markets, such as artificial intelligence, cybersecurity, advanced materials, and unmanned aerial systems—are increasingly viewed not only as national security imperatives, but as highly lucrative asset classes capable of generating venture-scale returns.
As firms like Protego Ventures bridge the once-impenetrable divide between Silicon Valley-style venture building and traditional military procurement, the global defense technology market is entering a new era of rapid, privately-funded innovation. By pairing frontline operational insights with disciplined capital allocation, specialized defense tech venture funds are rewriting the playbook for how modern militaries acquire, adapt, and deploy critical technological capabilities.
