The intersection of defense and venture capital continues to expand, with defense tech VC dealmaking reaching a record high in the first quarter of 2026. Amid this surge, Protego Ventures, a two-year-old firm positioning itself as Israel’s premier dedicated defense technology investor, has completed the final close of its inaugural fund at $125 million.
Led by managing partners Lital Leshem and Lee Moser, the fund fell slightly short of its initial $150 million target. According to Leshem, the decision was strategic: a smaller capital pool amplifies the impact of major exits. With portfolio company XTEND, a drone manufacturer that recently went public on the NYSE, viewed as a potential “fund maker,” raising additional capital would have diluted the returns generated by such a significant win.
Protego plans to deploy between $5 million and $50 million per investment, focusing on startups addressing critical security needs in Israel and globally. The firm’s origins trace back to the October 7, 2023, Hamas attack, when Ares Management encouraged Leshem and Moser to establish a vehicle dedicated to bolstering Israel’s defense capabilities through technology. Ares contributed a $30 million limited partnership stake, providing the foundational support for immediate investing.
Besides XTEND, Protego’s portfolio includes ASIO, a situational awareness developer that has partnered with Anduril. Leshem noted strong reception within military circles, stating that defense officials are actively engaging with the firm for training and technology acquisition.
The founders bring distinct backgrounds to the venture. Moser remains a managing partner at generalist VC firm AnD Ventures, while Leshem combines 11 years of military and intelligence experience with her background as a founder whose startup was acquired for $625 million in 2025. Leshem, who served as a reservist during the initial attacks while pregnant, described witnessing firsthand how modern battlefields differ from previous decades of conflict.
Competition in the sector is intensifying. Israeli authorities have allocated approximately $33 million in state guarantees to other firms, including Adir Capital and Sling Capital, to drive investment in dual-use and military technologies. Leshem indicated that Protego was too far along in its fundraising cycle to participate in that government tender.
Looking ahead, Protego is preparing to launch a second fund in the first quarter of 2027. The new vehicle will feature Israeli institutional investors and a major U.S. commitment already secured by Leshem, with an expanded mandate that includes early-growth American defense-tech companies.
Is $125 million really enough to compete with the giants entering the space? Skeptical they’ll maintain their ‘premier’ title much longer against well-funded rivals.
Interesting how the October 7 attacks directly spurred this specialized fund. It really shows how rapidly the defense tech landscape is shifting globally.
The strategy behind closing smaller than targeted makes total sense if XTEND delivers. Prioritizing exit returns over vanity metrics is smart VC work.