(Bloomberg) -- Anduril Industries Inc. is in talks with Peter Thiel’s Founders Fund and other investors to raise $1.5 billion, according to people familiar with the matter, in what would be one of the year’s largest funding rounds not exclusively focused on artificial intelligence.

Investors were anxious to put money into the round, according to the people, who asked not to be identified discussing private information. There was $5 billion worth of demand from investors for the deal, said some of the people, but the company chose to take a smaller sum.

The deal would value the startup, co-founded seven years ago by Oculus headset creator Palmer Luckey, at $14 billion including dollars raised. The Information earlier reported details of the discussions. Anduril did not comment on the talks. 

VC demand for a piece of the startup underscores Silicon Valley’s growing interest in defense technology. Investors have poured money into the industry over the last year with hopes that the Pentagon will seek to update its technology and make bets on new startups. Historically, it’s been difficult for new companies to do business with the government.

Investor interest in Anduril picked up after the startup was selected by the US Air Force in April as one of two vendors to move forward on the Collaborative Combat Aircraft program, one person said. “Anduril is proud to pave the way for other non-traditional defense companies to compete and deliver on large scale programs,” the company said in a statement about the contract.

The company will put the money toward research and development and scaling up manufacturing, one person said. It could also seek to make acquisitions, another person said.

Founders Fund is slated to co-lead the investment with Sands Capital. The details of the deal are in flux and could still change.

--With assistance from Lizette Chapman.

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