Protego Ventures, a defense technology venture capital firm based in Israel, has closed its inaugural fund with US$125 million in capital commitments. Founded by Lital Leshem and Lee Moser, the firm describes itself as Israel's first and largest dedicated defense tech investor. The closing signals growing investor conviction in startups developing military and dual-use technologies under real operational conditions.
Fund Formation and Strategy
The fund initially raised US$70 million and added US$55 million in a final close, falling short of its US$150 million target. According to the founders, the smaller size was deliberate because a single successful portfolio investment can have a greater impact on the fund's overall returns. Protego plans to invest between US$5 million and US$15 million per company, targeting defense and security startups that have demonstrated commercial and operational traction.
Protego was formed after the October 7, 2023 Hamas attack on Israel, when executives from Ares Management encouraged Leshem and Moser to join forces and establish a dedicated defense investment platform. Executives from Ares became some of Protego's largest backers, investing US$30 million as limited partners and giving the new firm the capacity to begin investing immediately. The founders bring complementary expertise: Leshem has 11 years of experience in military and intelligence roles, while Moser is a venture capitalist who remains a managing partner at AnD Ventures.
Portfolio Momentum and Validation
Protego's first portfolio company, XTEND, develops autonomous robotic systems and has worked with defense customers including the Israel Defense Forces, the US Department of Defense, and allied militaries. Protego led XTEND's US$70 million Series B round before the company went public on the New York Stock Exchange. Its public listing has positioned XTEND as a potential "fund maker," meaning a single investment could potentially generate returns equivalent to the size of Protego's debut fund.
Beyond XTEND, the portfolio includes ASIO, which develops navigation and situational awareness systems for contested environments and has partnered with Anduril. Prisma Photonics converts existing fiber-optic infrastructure into large-scale sensing systems capable of monitoring pipelines, power grids, and secured sites. Rilian applies artificial intelligence to cyber operations, helping organizations capture and preserve operational knowledge for use in restricted computing environments.
A Shifting Market
Defense technology has become an increasingly important area of venture capital investment, with global activity reaching record levels in the first quarter of 2026. Protego is positioned at the intersection of Israel's established defense industry and its technology startup ecosystem. Its founders argue that Israeli companies benefit from rapid interaction between engineers and frontline users, allowing technologies to be tested and refined under real operational conditions.
Leshem said growing investment reflects the defense modernization needs of Israel and other allied countries, while Moser noted that founders often encounter a gap between generalist investors without deep defense expertise and defense-focused investors with limited familiarity with the Israeli market. Protego aims to bridge that gap by helping portfolio companies connect with business partners, investors, and defense customers internationally. The firm focuses primarily on companies whose technologies have progressed beyond development and are already gaining customer adoption.
A Competitive Landscape
Israeli authorities are also backing the sector, awarding Adir Capital and Sling Capital about US$33 million in state guarantees to invest in military and dual-use technologies. Protego did not participate in the government tender because its own fundraising process was already too advanced. The firm's founders expect competition to intensify as additional venture capital firms raise funds dedicated to defense technology.
Protego is already preparing a second fund planned for the first quarter of 2027, with backing expected from Israeli institutional investors and a large US commitment that Leshem said has already been secured. The new vehicle is expected to broaden the firm's mandate to include early-growth American defense technology companies and deepen its presence in the US defense ecosystem. The US$125 million debut fund therefore establishes Protego as a significant specialist investor as defense technology develops into a more distinct global venture capital category.
Source: TechCrunch