Symphony Communication Services LLC, the instant-messaging software company backed by many of Wall Street's biggest firms, is seeking another investment round that may value the startup at as much as $1 billion, according to people familiar with the matter.

The Palo Alto, Calif., company is canvassing a range of potential new investors, including venture-capital funds and additional financial firms that weren't among the 14 that took a stake in Symphony last year, the people said. Symphony also is seeking additional funds from its existing backers, which include Goldman Sachs Group Inc., Morgan Stanley, J.P. Morgan Chase & Co. and BlackRock Inc., the people said.

Those 14 firms invested $66 million in Symphony, which in turn bought Perzo Inc., then a two-year-old startup founded by veteran communications executive David Gurle. Goldman, which had led the consortium, contributed its in-house messaging developments to the new venture.

Wall Street has rallied around Symphony because of its offering's potential as an alternative to Bloomberg LP's terminals, a ubiquitous—and expensive—presence on most big banks' and money managers' trading floors. Among the Bloomberg terminal's numerous functions, its instant-messaging platform has proved to be one of the most popular for many traders and salespeople.

Dow Jones & Co., the publisher of The Wall Street Journal, is a member of the Symphony Foundation, a group of companies that are using the startup's open-source software to develop applications that can be used on the messaging system.

Symphony has made its encryption technology a key selling point for financial firms wary of their sensitive data falling into the wrong hands.

Bank regulators have taken notice. Last week, New York's Department of Financial Services sent Symphony a letter asking about some of its features, including data encryption and deletion. Banks have paid billions of dollars in financial penalties in recent years to resolve allegations of market manipulation. In those cases, investigators relied heavily on communications records such as chats between traders and other bank employees.

In his letter to Symphony, acting Department of Financial Services Superintendent Anthony Albanese noted that banks had an obligation under New York state law to retain their records.

In response, a Symphony spokeswoman said in a statement the software's features were built to enable Symphony's customers to meet their regulatory requirements.

Symphony's messaging platform is set for launch to U.S. customers in August, with the service becoming available globally in September.

A deal on the new funding isn't imminent. And while some investors have expressed interest in backing Symphony at the $1 billion valuation, the company could fall short given the early stage of its development, people familiar with the matter said. A Symphony spokeswoman declined to comment on the fundraising efforts.

Bank of America Corp., Bank of New York Mellon Corp., Citadel LLC, Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG, Jefferies LLC, Maverick Capital Ltd., Nomura Holdings Inc. and Wells Fargo & Co. were among those that invested in Symphony last year.

U.S. financial-technology companies drew nearly $10 billion in investments last year, up from $3.4 billion in 2013, according to research by Accenture and economic development group The Partnership Fund for New York City.

Write to Justin Baer at justin.baer@wsj.com and Sarah Krouse at skrouse@efinancialnews.com

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