What are small caps?
Small caps are listed companies with a comparatively low market capitalisation – that is, a small stock-market value relative to the large, well-known corporations. The term says nothing about quality or business model on its own; it only describes size. This page explains how to make sense of this size class – without any recommendations.
How small caps are defined
There is no fixed, universally agreed threshold for when a company counts as „small“. The classification is a convention and varies by index provider, market and source. As a rough orientation, you often see ranges like these:
- Small cap: broadly somewhere between a few hundred million and around two billion euros in market capitalisation.
- Micro cap: below that, often in the range of a few tens to a few hundred million euros.
- Nano cap: the smallest tier, sometimes well under a hundred million euros.
These figures are deliberately fuzzy: one provider draws the line differently from the next, and the values shift with the overall market. What matters is the principle behind them – market capitalisation measures a company's stock-market value and is the yardstick these classes are pinned to.
Where to find them in the DACH region
In the German-speaking region, smaller companies show up in particular segments and indices. In Germany these include the SDAX as a selection index of smaller names, as well as market segments such as Scale and the Prime Standard, which set different transparency requirements. In Switzerland, the SPI Extra, for example, groups smaller and mid-sized names outside the largest values. In Austria, the ATX Prime maps a broader set of names subject to enhanced requirements.
Such a segment or index is a starting point for your search – not a seal of quality. Inclusion in an index follows rules on size, free float or tradability, but it says nothing about whether an individual company is soundly run.
Why size matters
Size has practical consequences. Smaller companies are often followed by fewer analysts, sometimes none at all. That means fewer publicly available assessments – and more work of your own when you research. At the same time, liquidity is frequently lower: fewer freely tradable shares (free float) and lower trading volumes can mean that prices move more sharply and that buying or selling is harder to execute. This produces a two-sided picture: smaller names tend to be seen as more volatile and riskier, but they also, in principle, leave room to develop before a company becomes widely known. Both are tendencies, not laws.
Because such names sit further from the spotlight, a structured approach pays off. Our glossary explains the recurring terms, and the 6-step process gives you a thread to follow when sizing up a company step by step.
This page is for educational purposes only. It deliberately names no specific companies or people, and contains no buy or sell recommendation, no price targets and no investment advice. You make decisions independently and on the basis of your own research.