Small-cap stocks can be great growth opportunities, but investors should also be aware of the risks associated with smaller companies' stocks. First, they tend to be more volatile, meaning that price swings and drawdowns can be larger than with bigger companies' stocks. These shares may also be less liquid and more thinly traded, with larger bid-ask spreads, making it more costly to enter and exit positions. At the company level, smaller companies may have a harder time accessing funding or raising capital than larger companies do. This can be a limiting factor for operations and growth.