The convergence of defense and venture capital, once an infrequent occurrence, has rapidly transformed into a defining characteristic of the contemporary investment landscape. This burgeoning synergy is underscored by a monumental surge in defense tech venture capital dealmaking, which achieved a record high in the first quarter of 2026. This global trend has catalyzed the emergence of specialized VC firms worldwide, dedicated exclusively to nurturing and funding innovative defense startups. At the forefront of this movement in Israel stands Protego Ventures, a pioneering firm that has just concluded the final close of its debut fund, securing an impressive $125 million in capital commitments. This significant milestone, exclusively revealed to TechCrunch, not only solidifies Protego’s position as Israel’s first and largest dedicated defense tech VC but also highlights a profound shift in how nations are approaching their security needs through technological innovation.
A New Investment Frontier: Defense Tech’s Global Ascent
The record-setting activity in defense tech VC in Q1 2026 reflects a fundamental reorientation of capital towards strategic security solutions. Historically, venture capitalists often shied away from defense investments due to long development cycles, complex regulatory hurdles, and a perceived lack of "exit" opportunities outside of traditional government contracts. However, recent geopolitical shifts, escalating global tensions, and the rapid evolution of dual-use technologies have dramatically altered this calculus. The modern battlefield, increasingly defined by artificial intelligence, autonomous systems, advanced sensors, and sophisticated cyber capabilities, demands agility and innovation that traditional defense contractors often struggle to deliver at speed. Startups, unencumbered by legacy systems and bureaucratic processes, are uniquely positioned to meet these urgent demands.
This shift is not merely cyclical but structural. Global defense spending has been on an upward trajectory, with many nations increasing their budgets in response to perceived threats. According to various market analyses, investment in technologies with defense applications, ranging from advanced robotics and quantum computing to satellite imagery and cybersecurity, has seen exponential growth. This has created a fertile ground for venture capital, eager to back companies that can offer transformative solutions. Specialized funds, like Protego Ventures, are crucial in bridging the gap between cutting-edge technology developed in the startup ecosystem and the specific, often classified, requirements of defense and national security agencies. Their expertise lies not only in identifying promising technologies but also in navigating the unique challenges of the defense market, including procurement processes and regulatory compliance.
Protego Ventures: Forged in a Crucible of Change
Protego Ventures, founded just two years ago, stands as a testament to this transformative era. Its origins are deeply intertwined with the heightened security imperatives that emerged following the devastating Hamas attack on Israel on October 7, 2023. This pivotal event served as a stark reminder of the evolving nature of threats and the critical need for technological superiority in modern warfare. It was in this context that Ares Management, a global alternative investment manager and one of Protego’s largest backers, suggested the collaboration between Lital Leshem and Lee Moser. Ares’s conviction was clear: new technologies would be indispensable for bolstering Israel’s defense capabilities in the face of these unprecedented challenges. With a substantial $30 million investment as a limited partner, Ares provided Protego with the foundational support needed to commence immediate investments, validating the firm’s strategic vision from its inception.
The leadership of Protego Ventures by two prominent women, Lital Leshem and Lee Moser, is itself a significant narrative within the traditionally male-dominated defense and venture capital sectors. Their combined expertise forms a powerful synergy. Lital Leshem brings an extensive background from the military and intelligence field, spanning 11 years, coupled with entrepreneurial success, having co-founded a startup that was acquired for $625 million in 2025. Her deep understanding of operational needs and the intricacies of defense technology is invaluable. Lee Moser, on the other hand, is a seasoned venture capitalist who maintains her role as a managing partner at the generalist VC firm AnD Ventures, bringing a wealth of investment acumen and market insight to Protego. This dual leadership, merging battlefield insight with sophisticated financial strategy, positions Protego to uniquely identify and nurture companies addressing the most pressing defense and security challenges.
Investment Strategy and Early Triumphs
With its $125 million debut fund, Protego Ventures is equipped to deploy significant capital, investing between $5 million and $50 million per company. The firm’s mandate is clear: to focus on startups "addressing the critical defense and security needs of Israel and the global community." This broad yet focused approach allows Protego to target a diverse range of technologies, from advanced robotics and artificial intelligence to sophisticated surveillance and cyber defense systems. The emphasis on both Israeli and global needs acknowledges the interconnectedness of modern security challenges and the potential for Israeli innovation to offer solutions on an international scale.
Protego’s investment strategy has already yielded a remarkable success story in XTEND, a leading drone manufacturer and its inaugural portfolio company. Earlier this month, XTEND achieved a significant milestone by going public on the New York Stock Exchange (NYSE), a rare and highly coveted outcome for a startup, particularly in the defense sector. XTEND specializes in human-guided drone systems, offering advanced capabilities for reconnaissance, security, and tactical operations. Their technology represents a critical advancement in autonomous and semi-autonomous systems, essential for reducing human risk in dangerous environments and enhancing situational awareness.
The extraordinary performance of XTEND had a direct impact on Protego’s fundraising strategy. The firm intentionally concluded its debut fund at $125 million, falling short of its initial $150 million target. This decision was a strategic calculation rooted in the concept of a "fund maker" – a single investment capable of returning the entire fund’s capital. With XTEND demonstrating such robust potential, raising additional capital would have diluted the upside for existing limited partners, spreading the impressive returns across a larger pool of investors. As Leshem succinctly put it, "Nobody wants to share the pie." This decision underscores the confidence Protego has in its portfolio companies and its commitment to maximizing returns for its investors.
Beyond XTEND, Protego’s portfolio includes other promising ventures, such as ASIO, a company developing advanced situational awareness systems. ASIO’s technology is vital for integrating disparate data sources to provide a comprehensive and real-time understanding of complex operational environments. Its partnership with Anduril, a prominent American defense technology company, further validates ASIO’s innovative approach and its potential for broader adoption in both national and international defense contexts. These early investments demonstrate Protego’s ability to identify companies with high-impact technologies and strategic market partnerships.
Israel’s Pivotal Role in Global Defense Innovation
Israel has long been recognized as a "Startup Nation," a global hub for technological innovation, particularly in cybersecurity, enterprise software, and various deep tech sectors. This reputation is deeply rooted in the country’s unique ecosystem, which benefits from a highly skilled workforce, often trained in elite military technology units like Unit 8200, and a culture of entrepreneurial drive. The constant security challenges facing Israel have historically spurred significant investment in defense R&D, leading to groundbreaking advancements that frequently find dual-use applications in the civilian sector.
The events of October 7, 2023, however, marked a turning point, intensifying the focus on defense innovation with an unprecedented urgency. Lital Leshem’s personal experience underscores this profound shift. Deployed as a pregnant reservist on the day of the attacks, she witnessed firsthand how the battlefield had evolved, noting its stark difference from what she had known over the preceding decade. "Everything changed on October 7," Leshem recounted to TechCrunch. "And basically until the delivery room, I was there, witnessing and getting the first-row seat to how the battlefield acted differently from what I knew in the past decade." This visceral experience informed a deeper understanding of the immediate and critical needs for advanced technological solutions.
The Israeli government has also acknowledged this critical shift, actively seeking to foster further investment in defense and dual-use technologies. In a strategic move, authorities awarded approximately $33 million in state guarantees to venture capital firms Adir Capital and Sling Capital, specifically to catalyze investments in this vital sector. These initiatives are part of a broader national strategy to maintain Israel’s technological edge and ensure its long-term security. While Protego Ventures was too far along in its own fundraising process to participate in the government’s tender, its independent success underscores the robust private market interest in Israeli defense tech and the firm’s strong position within this burgeoning ecosystem. The strong reception Protego has received within defense circles, with military personnel seeking engagement, reflects a genuine desire for collaboration and access to cutting-edge innovation.
Leadership, Networks, and Future Horizons
The success of Protego Ventures is inseparable from the deep networks and extensive experience of its founders. Navigating the unique intricacies of the Israeli market, especially in the sensitive defense sector, requires an "insider" advantage. Lee Moser’s continued role as a managing partner at AnD Ventures provides Protego with broad access to the general tech ecosystem and a keen eye for disruptive technologies, while Lital Leshem’s extensive military and intelligence background offers unparalleled insight into defense requirements and strategic priorities. Her experience from co-founding a startup that achieved a $625 million acquisition in 2025 further demonstrates her entrepreneurial prowess and ability to scale impactful ventures. This combination of venture capital acumen and deep defense sector knowledge is a powerful differentiator for Protego.
Looking ahead, Protego Ventures is already charting its course for expansion. The firm plans to launch its second fund in the first quarter of 2027, signaling its ambition and the continued demand for its investment thesis. This subsequent fund is slated to be backed by a combination of Israeli institutional investors and a significant commitment from a large U.S. institution, which Leshem has already secured. Crucially, the scope of the second fund will be broader, expanding to include early-growth American defense-tech companies. This strategic move highlights Protego’s global aspirations, recognizing the interconnectedness of defense innovation across allied nations. By investing in the U.S. market, Protego aims to foster cross-border collaboration and accelerate the development and deployment of technologies critical for global security.
The trajectory of Protego Ventures mirrors a larger narrative: the indispensable role of agile, privately funded innovation in modern defense. As geopolitical uncertainties persist and technological advancements accelerate, the traditional lines between civilian and military technology will continue to blur, creating both immense opportunities and complex challenges. Firms like Protego are not just investing capital; they are investing in the future of national security, leveraging entrepreneurial drive to confront the evolving threats of a dynamic world. Their success will likely serve as a blueprint for future defense tech investors, proving that strategic private capital can indeed be a cornerstone of national resilience and global security.
