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 that develop 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 listing can return the entire fund more efficiently. Protego plans to invest between US$5 million and US$50 million per company, targeting firms that have already proven their products with customers.
Protego was formed after the October 7, 2023 Hamas attack on Israel, when Ares Management encouraged Leshem and Moser to build a dedicated defense investment platform. Ares committed US$30 million as a limited partner, providing the new firm with immediate investment capacity. The founders bring complementary expertise: Leshem served for 11 years in Israeli military and intelligence roles, while Moser is a venture capitalist and managing partner at AnD Ventures.
Portfolio Momentum and Validation
Protego's first portfolio company, XTEND, develops autonomous robotic systems used by 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 at a valuation of US$1.5 billion. XTEND trades under the ticker XTND and represents a potential fund-returning outcome for early backers.
Beyond XTEND, the portfolio includes ASIO, which builds navigation and situational awareness systems for contested environments and is integrated with Anduril. Prisma Photonics converts existing fiber-optic cables into large-scale sensors that monitor pipelines, power grids, and secured sites using artificial intelligence. Rilian applies AI to cyber tasks, capturing and preserving operational knowledge for use in restricted computing environments.
A Shifting Market
Global defense technology venture activity reached US$19.8 billion in the first quarter of 2026, according to figures cited by Protego. The firm is positioned at the intersection of Israel's advanced defense industry and its fast-moving startup ecosystem. Founders argue that companies developed in Israel benefit from a rapid feedback loop between engineers and frontline operators, creating technology that can scale internationally.
Leshem said smart capital is following the free world's defense modernization needs, while Moser noted that founders often found generalist investors lacked sector understanding and defense investors lacked Israeli market knowledge. Protego's model includes helping portfolio companies expand through connections to business partners, investors, and defense customers globally. The firm focuses on companies that have moved beyond development and are already winning customers.
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 that tender because its own fundraising was too far advanced. The firm's founders expect competition to intensify as more venture capital firms enter defense technology.
Protego is now preparing a second fund planned for the first quarter of 2027, with backing from Israeli institutional investors and a large US commitment already secured. That vehicle will broaden the mandate to include early-growth American defense technology companies and deepen the firm's presence in the US defense ecosystem. The first fund's close marks another step in the transformation of defense technology into a distinct and investable global asset class.
Source: TechCrunch