Defense and venture capital used to rarely overlap, but that’s no longer the case. Defense tech VC dealmaking set a record in Q1 2026, and new VC firms have emerged around the world to invest solely in defense startups.

One of these is two-year-old Protego Ventures, which presents itself as the first and largest dedicated defense tech VC in Israel. Led notably by two women, Lital Leshem and Lee Moser, it has just completed the final close of its debut fund with $125 million in capital commitments, TechCrunch learned exclusively.

This fund size is enabling Protego to invest between $5 million and $50 million per company, with a focus on startups “addressing the critical defense and security needs of Israel and the global community,” according to its website.

These include the likes of drone maker XTEND, its first portfolio company, which went public on the NYSE earlier this month. That’s also why Protego stopped short of its $150 million target: a smaller fund magnifies the impact of a single big win on overall returns, and with XTEND now looking like a potential “fund maker” — a single investment capable of returning the whole fund — raising more capital would only dilute that upside among a larger pool of investors. “Nobody wants to share the pie,” Leshem said.

Ares Management is one of Protego’s biggest backers. The investment firm suggested that Leshem and Moser join forces and start Protego in the aftermath of the October 7, 2023, Hamas attack on Israel, with the conviction that new technologies would be key to boosting Israel’s defense capabilities in the face of new threats, Leshem said.

With a $30 million investment as a limited partner, Ares gave Protego the support it needed to start investing right away, Leshem said. Besides XTEND, its portfolio also includes startups such as ASIO, which develops situational awareness systems and has partnered with Anduril.

Leshem says the reception in defense circles has been strong. “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.”

Still, the Israeli market is easier to navigate for insiders, and Protego’s two founders are leaning into their networks. Moser, a seasoned venture capitalist, will remain a managing partner at the generalist VC firm AnD Ventures. As for Leshem, who co-founded a startup that was acquired for $625 million in 2025, she also brings 11 years of experience in the military and intelligence field to their approach.

“Everything changed on October 7,” Leshem told TechCrunch. She was deployed, while pregnant, as a reservist on the day of the attacks. “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.”

Protego won’t have the field to itself for long. Israeli authorities have taken notice of the same shift, awarding VC firms Adir Capital and Sling Capital about $33 million in state guarantees to invest in military and dual-use technologies, with other funds also raising capital for similar bets. (Leshem said Protego was too far along in its own fundraising to take part in the government’s tender.)

Protego, meanwhile, is already planning its next move: a second fund in the first quarter of 2027, backed by Israeli institutional investors and one large U.S. commitment Leshem has already secured, with a broader scope that includes early-growth American defense-tech companies.