A small-cap company is a public company whose total market value, or market capitalization, generally falls between about $300 million and $2 billion, while a micro-cap company is smaller, typically under $300 million.
Market capitalization is the total value of a company's outstanding shares, calculated by multiplying the share price by the number of shares outstanding. Investors use it to group companies by size, because size tends to correlate with liquidity, volatility, analyst coverage, and the type of investors that hold the stock.
The commonly used bands are approximate and vary by source, but a typical framework is: large-cap above roughly $10 billion, mid-cap between about $2 billion and $10 billion, small-cap between about $300 million and $2 billion, and micro-cap below about $300 million. Some definitions extend the small and micro-cap universe up to $1 billion or beyond, especially outside the largest US indices. The boundaries are conventions, not rules.
Smaller companies share a set of characteristics that shape how they are followed and traded. They tend to have less sell-side analyst coverage, thinner trading volume, and a shareholder base weighted more toward retail investors and specialist funds than toward large index-driven institutions. These traits create both the challenge and the opportunity of the category. Small and micro-cap stocks can be under-followed and undervalued relative to their fundamentals, which is precisely why specialist investors seek them out and why deliberate investor relations can have an outsized effect.
For companies in this range, being small is not a disadvantage in itself. The disadvantage is being small and invisible. Closing that gap is the core work of investor relations for this segment.