Two women break barriers with $150 million Israeli defense fund

Unlike other Israeli defense-tech venture capital firms, Protego is the only one led by two women: Leshem and co-founder Lee Moser, an experienced financier and former chief of staff to Israeli ambassador Michael Oren.

“We are a $150 million dollar fund led by two women – one from the defense industry, and one from the VC industry,” she said, adding that out of a team of eight staff, seven are women – “not because they are women but because they were just the right fit for the job.”

“Still,” Leshem said, “it is very different because if you look at all the other [Israeli] defense-tech VCs that have emerged in the last year, they are all male-dominated, usually by four-star generals coming out of the IDF, the Shin Bet [Israel’s internal security agency] or the Mossad – and most have zero understanding of finance, VCs, or investments; they just come from the defense industry.”

According to Leshem, Protego was the first defense-tech VC to emerge during the two-year war, which saw the IDF using new – and old – technology to combat its enemies on at least seven fronts. She said that their early start, less than a year after October 7, allowed the firm to not only raise significant funds but also to attract strong backers from Silicon Valley and beyond.

Founded in 2014 by Leshem with partners Amir Elichai, Alex Dizengof, and Yoni Yatsun, Carbyne was inspired by that year’s kidnapping and murder of three Israeli teenagers by Hamas terrorists near Hebron in the West Bank. The company’s technology provides real-time data and live video, as well as transcription and multilingual translation tools for emergency centers.

“I’m super proud of the fact that the company saves lives on a daily basis,” Leshem said, noting that it handles more than a million calls a week worldwide, especially in the US.

Carbyne’s success has led Leshem to high-profile positions in the tech world, including roles at US-based firms such as Intel and, eventually, security, aviation and logistics contractor Frontier Resource Group.

Leshem says her success stems from her military background and the invaluable advice she received from others in the industry, such as advice to “drink coffee with a new person every day.”

“It was one of the best tips I’ve ever gotten,” she said, describing how, during a brief professional crisis, a friend connected her to one new person and instructed her simply to meet whoever else that person introduced her to.

Gradually, she built up her network, much of it while working at Frontier, which collaborates with the Pentagon and many governments worldwide – including Israel – until she was introduced to Moser.

The two connected immediately and decided to work together. After returning to Israel in early 2023, Leshem and Moser began exploring opportunities, and a few weeks after October 7 they traveled to the US to meet investors.

“Lee told me, ‘Listen, I’m going to meet investors; join me, give the military perspective,’” Leshem recalled. What was supposed to be a two-day trip to Baltimore turned into a 14-day journey across 12 states, with three or four events each day.

“We met so many people who wanted to do good for Israel,” she said. “Some wanted to come here and physically volunteer – pick vegetables or paint walls; some wanted to donate to different organizations and were looking for the right access; and I guess there was the third pillar that wanted to support Israel where it lacks the most – in its resilience for the future.”

At one event, someone suggested creating a defense-tech fund as a way of investing in Israel’s defense systems to prevent another October 7.

Leshem said she was initially skeptical.

“Throughout my career, I was always told that venture capital and defense are two parallel lines doomed never to meet,” she said, explaining that lengthy procurement processes, heavy regulations, and the challenge of selling to governments – typically the main customers – do not fit the fast-paced goals of VC firms seeking quick returns.

Investors, she noted, prefer to “invest in fintech or cyber because that is where they can see quick returns and exit strategies.”

But the person who first planted the idea insisted: “As a private investor, I can tell you, it is gonna work. Everybody is going to invest in defense tech.”

Back in Israel, Leshem and Moser began researching. Leshem soon realized that the war had created new opportunities: global interest in the technologies being developed and used by the IDF, a loosening of regulations, shorter procurement times, and sharply increased military budgets.

The rest, she said, just fell into place.

“Military and government budgets went through the roof because there was a necessity and when you need it, you need it – and you need it today, you need it now, so you don’t have to go through the entire procurement processes, and regulations are not an obstacle anymore,” she said, adding, “defense tech is no longer a privilege… It’s a necessity.

“You can no longer win wars with only a massive number of soldiers or tanks,” Leshem explained. “There is a complete shift, and countries have to adapt.”

By the end of 2024, the two women had launched Protego and began looking to invest in early-growth companies across key defense sectors such as artificial intelligence and machine learning, sensors, drones, and unmanned aerial vehicle (UAVs).

To date, two start-ups have joined its portfolio.

The first is XTEND, which, according to Protego’s written material, is revolutionizing military operations with an AI-driven XOS operating system that enables intuitive control of tactical drones and robots.

The second is Prisma Photonics, which transforms existing fiber-optic cables into ultra-sensitive sensors, providing continuous, wide-area monitoring for critical infrastructure.

“We’re aiming to invest between $5 million and $15 million in about 12 to 14 different companies at the end of our investment period,” said Leshem, adding that Protego’s US base helps them “scale globally.”

Asked about backlash against Israeli defense tech amid worldwide calls to boycott Israel over its actions in Gaza, Leshem said there has been some negative sentiment, but the silver lining is that the technologies have been tested on the battlefield.

“There is a double bottom line for an Israeli defense VC,” she said. “Obviously, the companies we’re going to invest in are Israeli companies, but [because of some of the negative sentiments worldwide] there is some risk.”

However, she continued, these technologies “come with an Israeli stamp of actually working in real time. They are test-approved – and that is what makes them attractive.”

“There are some countries that will want the technology, like Germany, for example, which just bought the Iron Dome and the Arrow Three in one of the largest defense deals made in the past 20 years with Europe. And then there is Italy, which decided not to buy anything from Israel at the moment because of the war,” she said.

“It is outstanding to have two women jointly found an investment fund, never mind that it is in the defense sector,” Anne Baer, CEO of iKare Innovation and Director of Women in Tech Israel, the Israeli chapter of the global organization, told the Report.

Baer said that women are very underrepresented in the cyber and defense tech sector. Most start-ups, she said, are founded by men.

“In 2023, there were about 3,000 cyber startups in the world, out of which about 1,000 in Israel, and out of those, only four were founded by women,” Baer said, adding that women running investment funds worldwide are also very few.

Asked if she believes two years of war where women increasingly served alongside men in the army might change the landscape, Baer said, “I am not personally obsessed with having more women in the battlefield. I am interested in having more women selected for the tech units. Women should have equal opportunities and deserve to fulfill all their dreams. My objective is to make them dream of tech units, not of combat.”

She said that prior to joining the army, girls have an advantage over the boys because they have more choices of where to serve but, said Baer, “instead of using this fantastic possibility to opt for tech units, a lot of them consider that they will become more equal to men if they fight with them in the field... it’s a missed opportunity.”

Leshem though is hopeful that the increase of female soldiers in high-ranking positions and combat roles, including tech units, sparked by two years of war will lead to overall changes in the defense industry as well.

“I think there is a progression, and I hope that it will grow and move forward because there is so much traction in the defense tech industry right now,” she said. “It’s a matter of courage. They just need to have the courage to go in that direction.”

“Most of the rooms I sit in are 99% men. I’m used to it, and it doesn’t frighten me,” Leshem said. “I want to be judged by my performance, not my gender; that is what I tell people who look at me differently because I’m a woman in the defense field.”

“If the people are serious and judge me by what I say and by my experience and knowledge, and not by the fact that I’m wearing a dress, then they are worth my time and attention,” she said. “If not, then I guess I won’t be doing business with them.”■