HONG KONG—Investors are considering hanging a valuation of more than $10 billion on a highflying news-aggregation app—known as Toutiao—that has quickly become one of the hottest startups in China.

The news app’s parent company, Beijing Bytedance Technology Co., is considering raising about $1 billion in its latest round, according to people familiar with the situation. The new valuation target of more than $10 billion, including the fresh funds for Beijing Bytedance, is a sign of the company’s rapid progress after it was valued...