TOKYO -- Investment by Japanese companies in domestic startups has swelled by more than eight times over the past five years, topping the amount raised through initial public offerings in fiscal 2018, as big businesses scramble to tap fresh sources of innovation.

Venture capital funding jumped 50% to 345.7 billion yen ($3.09 billion) last fiscal year, well above the total of about 220 billion yen from IPOs, according to data compiled by mergers and acquisitions advisory firm Recof. The average raised per deal rose 6% to 334 million yen for a second straight year of growth.

The surge in recent years is linked to the rise of open innovation. Companies worried about getting left behind if they try handling development on their own are investing in startups as a way to more effectively tap their new technology.

This represents a sea change for Japanese startups. Fledgling companies had traditionally raised money mainly through IPOs, as financial institutions and established businesses were leery of risking money on unproven upstarts.

Startups in financial technology are among the beneficiaries. Mobile payment platform operator Origami said last September that it had secured 6.7 billion yen from investors including Toyota Motor arm Toyota Finance. Cloud-based accounting software provider Freee announced the previous month that it had raised a total of 6.5 billion yen from MUFG Bank, Line and others.

The influx of money has lifted startup valuations to new levels. But with the economy showing signs of a potential downturn, businesses could pull back on investment and get pickier about where their money goes.