The intersection of venture capital and national security has long been considered a "no-go zone" for traditional Silicon Valley-style investors. For decades, the defense industry was defined by monolithic, slow-moving prime contractors, while the venture world prioritized software-as-a-service (SaaS) scalability and rapid consumer adoption. However, a seismic shift has occurred. As geopolitical tensions rise and the nature of warfare undergoes a digital metamorphosis, private capital is rushing to fill the void. In Q1 2026, defense tech venture dealmaking hit an all-time record, signaling that the "Iron Curtain" between Silicon Valley and the Pentagon—and its global counterparts—has officially fallen.
At the vanguard of this movement is Protego Ventures, a two-year-old Israeli firm that has emerged as a titan in the specialized niche of defense technology. Led by co-founders Lital Leshem and Lee Moser, the firm has just finalized its debut fund with $125 million in capital commitments, solidifying its status as Israel’s largest dedicated defense-tech venture fund.
The Genesis: A Response to Crisis
The inception of Protego Ventures was not merely a reaction to market trends, but a direct response to a fundamental shift in regional security. In the immediate aftermath of the October 7, 2023, Hamas attack on Israel, the investment firm Ares Management—one of Protego’s primary backers—recognized the urgent need for a specialized vehicle to fund the next generation of Israeli security technologies.
Lital Leshem’s personal story is inextricably linked to this urgency. A veteran with 11 years of experience in military and intelligence, Leshem was deployed as a reservist on the very day of the October 7 attacks. "Everything changed on October 7," Leshem recalls. "I was there, witnessing and getting a first-row seat to how the battlefield acted differently from what I knew in the past decade."
Serving while pregnant, Leshem’s experience on the front lines provided a visceral understanding of the technological gaps in modern combat. This unique perspective, combined with the seasoned venture capital expertise of her co-founder, Lee Moser, formed the bedrock of Protego’s investment thesis. With Ares Management anchoring the fund with a $30 million limited partnership investment, the duo was able to deploy capital with immediate impact.
Chronology of a Defense Powerhouse
Protego’s trajectory reflects the speed at which the defense-tech sector is currently evolving. The firm’s rapid ascent is marked by several key milestones:
- October 2023: The strategic decision to form Protego is finalized, spurred by the changing nature of regional threats and the need for accelerated R&D in security.
- 2024–2025: Protego establishes its footprint, identifying early-stage dual-use startups. The fund begins backing companies like XTEND, an innovative drone manufacturer.
- Early 2026: XTEND achieves a significant milestone by going public on the New York Stock Exchange (NYSE), providing a massive return potential for Protego and validating the firm’s "fund maker" strategy.
- Q1 2026: Protego announces the final close of its $125 million debut fund.
- The Future (Q1 2027): The firm plans to launch its second fund, with an expanded scope that includes early-growth stage American defense companies.
Strategic Capital Allocation: Why Less Is More
In a market where many funds chase the largest possible assets under management (AUM), Protego took a contrarian approach. While they had the capacity to aim higher, they stopped their fund-raising efforts at $125 million, well below their $150 million target.
The logic behind this decision is rooted in the "fund maker" model. In venture capital, a "fund maker" is an investment that returns the entirety of the fund’s capital on its own. With the success of XTEND, Protego realized that a larger fund size would only dilute the returns for their investors. By keeping the pool of capital constrained, the impact of a massive win like XTEND is magnified. As Leshem succinctly put it, "Nobody wants to share the pie."
Protego’s current investment strategy focuses on checks between $5 million and $50 million, targeting startups that address the most critical defense and security needs of both Israel and the global community. Beyond XTEND, their portfolio includes companies like ASIO, which has developed sophisticated situational awareness systems and has already secured strategic partnerships with industry giants like Anduril.
Implications for the Global Defense Market
The rise of Protego is not an isolated incident; it is part of a broader, systemic shift. Israeli authorities have recognized that the traditional defense industrial base is insufficient for modern, software-defined warfare. In a bid to spur innovation, the Israeli government has awarded state guarantees—totaling approximately $33 million—to funds like Adir Capital and Sling Capital to drive investment into military and dual-use technologies.
While Protego opted not to participate in the government tender—due to their advanced fundraising stage—the existence of such state-backed initiatives highlights a global trend: governments are now treating venture capital as a critical component of national security policy.
The Human Capital Advantage
The success of Protego is as much about networks as it is about capital. Lee Moser brings her extensive experience as a managing partner at the generalist VC firm AnD Ventures, providing the firm with a bridge between the specialized defense world and the broader tech ecosystem. Lital Leshem, meanwhile, brings the credibility of a serial entrepreneur—having co-founded a startup acquired for $625 million in 2025—and deep-seated military operational knowledge.
This blend of expertise allows Protego to navigate the "insider" world of Israeli defense circles, where access to military leadership and the ability to test technology in real-world environments is a significant competitive advantage. "On the military side, there is a lot of respect," Leshem notes. "People are coming—even under the radar—to talk to us, to learn from us, to train with us, and for sure to get our technology and innovation."
Challenges and Future Outlook
Despite the momentum, the defense tech space faces unique hurdles. The regulatory environment is complex, the sales cycles for government contracts are notoriously long, and the ethics of dual-use technology remain a subject of intense public and academic scrutiny. Furthermore, as more firms enter the space, the competition for the best deals will undoubtedly tighten.
However, Protego’s roadmap suggests they are not intimidated. By looking toward the United States for their second fund in 2027, they are signaling a move toward a more integrated, global defense-tech market. With backing already secured from major U.S. institutional investors, Protego is positioning itself not just as an Israeli fund, but as a key player in the trans-Atlantic security tech corridor.
Conclusion: A New Paradigm
The emergence of Protego Ventures serves as a bellwether for the future of warfare and venture capital alike. The era of the "armchair investor" in the defense sector is over. Today’s successful defense VCs are those who understand that technology is now the primary theater of conflict.
By prioritizing high-impact investments, leveraging deep operational experience, and aligning their interests with the strategic realities of the modern battlefield, Protego has successfully bridged the gap between the venture lab and the front line. As the firm eyes its second fund, the message to the market is clear: defense tech is no longer an outlier—it is the new cornerstone of the venture capital landscape. The "pie" of defense innovation is growing, and firms like Protego intend to be at the table when it is served.
