Pre-IPO private placement activity is increasing at large banks as more companies choose to remain private.

“If tech companies aren’t going to go public like they used to and they’re going to stay private longer, then it’s just another way to get involved on the origination side of these tech companies,” said Frank Maturo, vice chairman of equity capital markets, Americas, at UBS, at a press briefing on Wednesday.

Bank of America Merrill Lynch earlier this month announced in an internal memorandum that it was establishing a Strategic & Private Capital Solutions Group to help companies raise money through private fund-raising. The rationale behind this ramp-up in pre-IPO activity is simple: buy-side clients such as hedge funds, private equity funds, and wealthy individuals are demanding it.

“Each firm now seems to be delving into these pre-IPO private placement type of investments because the buy side, when they want to raise a fund, is saying, ‘You have a relationship with X, Y, Z tech company. I’d like to see it,’” Maturo said. “T. Rowe (Price) and Fidelity have done it a lot, but now it’s broadening to other money managers.”

UBS has had a pre-IPO team in place for about six months, Maturo said. “The team talks to young tech companies to see if they want to raise capital pre-IPO, and then we go out to both institutions as well as the UBS wealth management arm and place those pre-IPO rounds,” he said.

After a record year in 2014, the IPO market slowed dramatically in the first quarter of 2015. The 34 IPOs raised $5.4 billion, making it the least active quarter by IPO count since the 1Q 2013 and the smallest by proceeds raised since the 3Q 2011, according to Renaissance Capital. Technology IPO issuance was likely dampened by the widespread availability of private funding at very high valuations, which produced little urgency for companies to seek IPO capital.

“It all comes down to whether the valuation is reasonable,” said Maturo. “We’ve all seen what happened to Groupon and Zynga, which were high-flying IPOs and 6 months later they crashed and burned. The question is with these companies getting billion-dollar private valuations, are they able to sustain those types of valuations into 2015 when and if they go public?”