Defense Tech VC Dealmaking Surges to Record Highs, Protego Ventures Closes Landmark $125 Million Debut Fund

The traditionally distinct worlds of defense and venture capital are rapidly converging, marking a significant paradigm shift in how military and security innovations are funded and developed. This evolving landscape has seen defense tech venture capital dealmaking reach an unprecedented record in the first quarter of 2026, signaling a robust and accelerating interest from investors in companies at the forefront of national and global security. This surge is further underscored by the emergence of numerous specialized VC firms worldwide, dedicated exclusively to backing defense startups. These firms are not merely reacting to market trends but are actively shaping a new ecosystem where cutting-edge technology can be rapidly deployed to address contemporary threats.

Prominent among these new players is Protego Ventures, a two-year-old firm that has quickly established itself as a pivotal force in the Israeli defense tech sector. Protego proudly positions itself as the first and largest dedicated defense tech venture capital firm in Israel, a claim that highlights its pioneering role in a nation renowned for its innovation and security prowess. In an exclusive revelation to TechCrunch, Protego Ventures announced the successful final close of its inaugural fund, securing an impressive $125 million in capital commitments. The firm’s leadership is particularly noteworthy, with two accomplished women, Lital Leshem and Lee Moser, at the helm, challenging conventional perceptions of the defense and venture capital industries.

The substantial capital raised in its debut fund empowers Protego Ventures with a flexible investment strategy, enabling it to deploy between $5 million and $50 million into individual companies. This strategic allocation is designed to support startups that are directly addressing what Protego identifies as "critical defense and security needs of Israel and the global community." The firm’s website further elaborates on its mission, indicating a focus on disruptive technologies that can enhance capabilities across various domains, including but not limited to advanced robotics, artificial intelligence for intelligence analysis, sophisticated drone systems, cybersecurity solutions, and next-generation communication networks. This targeted approach reflects a deep understanding of evolving geopolitical landscapes and the urgent demand for agile, technologically superior defense mechanisms.

A testament to Protego’s discerning investment strategy is its first portfolio company, XTEND, a pioneering drone manufacturer. Earlier this month, XTEND achieved a significant milestone by going public on the New York Stock Exchange (NYSE), a clear indicator of market confidence in its innovative solutions and growth potential. This early success played a crucial role in Protego’s decision to conclude its fundraising efforts at $125 million, deliberately stopping short of its initial $150 million target. The rationale behind this strategic choice, as explained by Lital Leshem, centers on the principle of maximizing returns for its limited partners. A smaller fund size significantly magnifies the impact of a single, highly successful investment on the overall fund’s performance. With XTEND emerging as a potential "fund maker" – an investment capable of generating returns equivalent to or exceeding the entire fund’s capital – raising additional capital would inevitably dilute the upside for existing investors. "Nobody wants to share the pie," Leshem succinctly stated, encapsulating the pragmatic financial reasoning behind their decision.

The foundational support for Protego Ventures came from influential backers, with Ares Management standing out as one of its most significant limited partners. The genesis of Protego itself is deeply intertwined with a pivotal moment in Israeli history. Following the devastating Hamas attack on Israel on October 7, 2023, Ares Management proactively suggested that Leshem and Moser combine their expertise to establish Protego. This initiative was driven by a profound conviction that innovative technologies would be indispensable in bolstering Israel’s defense capabilities and addressing the complex, evolving threats that emerged in the aftermath of the attacks. Ares Management’s commitment was substantial, providing a $30 million investment as a limited partner, which furnished Protego with the crucial initial capital required to commence its investment activities without delay.

Beyond XTEND, Protego Ventures has diversified its portfolio to include other promising startups. Among them is ASIO, a company specializing in advanced situational awareness systems. ASIO’s technological prowess has garnered significant attention, leading to a strategic partnership with Anduril, a prominent American defense technology company. This collaboration not only validates ASIO’s innovations but also highlights the increasing interoperability and strategic alliances forming between Israeli and international defense tech firms.

The reception within the broader defense community has been overwhelmingly positive, according to Leshem. She observed a significant level of respect for Protego’s mission and expertise from military circles. "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 elaborated. This direct engagement, often discreet, underscores the urgent operational need for advanced technologies and the military’s proactive approach in seeking out and integrating cutting-edge solutions from the startup ecosystem. It reflects a shift from traditional procurement cycles to a more agile, demand-driven adoption of innovation.

Navigating the intricacies of the Israeli market, particularly within the sensitive defense sector, often requires deep insider knowledge and established networks. Protego Ventures benefits immensely from the extensive backgrounds of its two co-founders. Lee Moser, a seasoned venture capitalist, brings a wealth of investment expertise and strategic insight to the firm. She maintains her role as a managing partner at AnD Ventures, a generalist VC firm, demonstrating her broad engagement in the startup ecosystem. Lital Leshem complements this with an equally impressive and highly relevant background. She previously co-founded a startup that achieved a remarkable $625 million acquisition in 2025, showcasing her entrepreneurial acumen. Furthermore, Leshem’s 11 years of experience in the military and intelligence fields provide an invaluable operational perspective, enabling Protego to deeply understand the nuanced needs and challenges faced by defense and security forces.

Leshem vividly recounted the profound impact of the October 7 events on her personal and professional life. "Everything changed on October 7," she told TechCrunch. At the time of the attacks, Leshem, then pregnant, was deployed as a reservist, experiencing the immediate aftermath firsthand. "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," she shared. This intensely personal experience profoundly shaped her conviction regarding the imperative for rapid technological evolution in defense, providing Protego with a mission-driven urgency rooted in direct, real-world understanding of modern warfare’s complexities.

While Protego Ventures currently holds a leading position, the defense tech investment landscape in Israel is poised for expansion and increased competition. Israeli authorities have recognized this strategic shift and are actively fostering the ecosystem. In a notable move, the government has awarded approximately $33 million in state guarantees to two other VC firms, Adir Capital and Sling Capital, specifically earmarking these funds for investments in military and dual-use technologies. This government backing aims to stimulate further private investment and accelerate the development of critical defense innovations. Additionally, other funds are also in the process of raising capital for similar ventures, indicating a burgeoning sector. Leshem noted that Protego was too far along in its own fundraising process to participate in the government’s tender, but this broader trend validates the firm’s early strategic focus.

Looking ahead, Protego Ventures is already charting its course for future growth and expansion. The firm is actively planning for the launch of its second fund, slated for the first quarter of 2027. This subsequent fund is anticipated to attract significant backing from Israeli institutional investors, alongside a substantial commitment from a large U.S. investor that Leshem has already secured. The scope of this second fund will be broader, strategically expanding to include early-growth American defense-tech companies, signaling Protego’s ambition to become a transatlantic player in the defense innovation space. This international expansion underscores the interconnectedness of global security challenges and the potential for synergistic technological advancements across borders.

Anna Heim is a writer and editorial consultant. You can contact or verify outreach from Anna by emailing annatechcrunch [at] gmail.com. As a freelance reporter at TechCrunch since 2021, she has covered a large range of startup-related topics including AI, fintech & insurtech, SaaS & pricing, and global venture capital trends. As of May 2025, her reporting for TechCrunch focuses on Europe’s most interesting startup stories. Anna has moderated panels and conducted onstage interviews at industry events of all sizes, including major tech conferences such as TechCrunch Disrupt, 4YFN, South Summit, TNW Conference, VivaTech, and many more. A former LATAM & Media Editor at The Next Web, startup founder and Sciences Po Paris alum, she’s fluent in multiple languages, including French, English, Spanish and Brazilian Portuguese.