Small cap companies are businesses with a relatively small market capitalization, typically defined as having a market value between $300 million and $2 billion. These companies are often in the early stages of growth and can be more volatile than larger firms, but they also have the potential for significant growth and returns. Investing in small cap companies can be appealing to investors looking for opportunities in emerging markets or innovative sectors. However, they may also carry higher risks due to factors like limited resources and market presence compared to larger companies, such as large cap companies or mid cap companies.