Israel's Protego Ventures Secures $125 Million in Debut Defense Tech Fund

Historically separated by ethical and financial barriers, the intersection of venture capital and defense technology is experiencing unprecedented growth. According to a report by TechCrunch, Israeli venture capital firm Protego Ventures has completed the final close of its debut fund, securing $125 million in commitments. Established just two years ago, Protego stands as Israel's first and largest venture firm dedicated exclusively to defense and security technologies.

The fund closed slightly below its initial $150 million goal, a strategic choice made by co-founders Lital Leshem and Lee Moser. By capping the fund at $125 million, Protego aims to maximize returns for its limited partners. This strategy is highlighted by the early success of its first portfolio company, drone manufacturer XTEND, which launched an initial public offering on the New York Stock Exchange earlier this month. Because XTEND shows potential to return the value of the entire fund on its own, raising more capital would have diluted the financial upside for current investors. The $125 million fund allows Protego to make substantial investments ranging between $5 million and $50 million per startup.

Protego’s inception was heavily influenced by geopolitical events. Following the Hamas attacks on Israel on October 7, 2023, global investment firm Ares Management encouraged Leshem and Moser to establish the fund, believing that cutting-edge technology is essential for enhancing defense capabilities. Ares anchored the fund with a $30 million commitment, enabling Protego to begin investing immediately. In addition to XTEND, Protego’s portfolio features ASIO, a developer of situational awareness systems that works in partnership with U.S. defense company Anduril.

The co-founders bring distinct expertise to the venture. Moser continues her role as a managing partner at the generalist venture firm AnD Ventures. Leshem, who previously co-founded a startup that was acquired for $625 million in 2025, possesses over a decade of experience in military and intelligence sectors. She was serving as a pregnant reservist during the October 7 attacks, giving her a direct perspective on the rapid evolution of modern combat environments.

While Protego has established an early lead, competition within Israel’s defense venture ecosystem is intensifying. The Israeli government recently allocated roughly $33 million in state guarantees to venture firms Sling Capital and Adir Capital to foster investments in dual-use and military innovations. Protego did not participate in this government tender because its own fundraising process was already too far advanced. Looking ahead, Protego is preparing to launch its second fund in the first quarter of 2027, which will target Israeli institutional backing and secure significant U.S. commitments to expand its focus toward early-growth American defense startups.

Why It Matters

The successful closing of Protego’s fund illustrates a broader structural shift in how national defense is financed and developed. Historically, defense technology was almost exclusively the domain of state-funded military contractors. The emergence of specialized venture firms like Protego, backed by global asset managers like Ares Management, signals that private capital is becoming an indispensable pipeline for battlefield innovation.

This dynamic also highlights how rapidly the startup lifecycle is adapting to geopolitical crises. The transition of XTEND from a startup to a publicly traded company on the NYSE, combined with ASIO's collaboration with Anduril, demonstrates that defense tech is no longer a slow-moving sector. For founders and investors, this speed validates a new investment thesis: defense startups can scale and exit quickly enough to satisfy traditional venture capital timelines.

Finally, the growing involvement of governments—seen through Israel's multi-million dollar state guarantees for competing funds—suggests that sovereign states are actively trying to guide and leverage private market dynamics. As Protego prepares to bridge Israeli innovation with American startups in its upcoming second fund, the defense tech sector is evolving from localized military solutions into a highly globalized, venture-backed ecosystem.