Anduril Industries Inc. is in talks to raise $400 million to $500 million in funding from investors in a deal that could take the form of a convertible note, according to people familiar with the discussions.

The defense technology startup is seeking a valuation of about $10 billion, said two of the people, who asked not to be identified discussing private information. Instead of raising a traditional funding round, Anduril could raise the money as debt slated to convert to equity at a $10 billion valuation in the future, in the event of a new financing round or other deal. The talks haven’t been finalized and the details of the convertible note could still change, the people said.

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Defense Startup Anduril Is in Talks to Raise More Than $400 Million From Investors