The Micro Revolution: How Small Companies Are Shaping Private Markets

By: Gridline Team | Published: 09/08/2023
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2 minutes

In a world where industry giants often dominate the headlines, there’s an under-the-radar category of companies poised for explosive growth: micro-multinationals.

With turnovers ranging from $50 million to $250 million, these agile and innovative entities are bridging the gap between startups and established multinational corporations. Micro-multinationals present an unprecedented opportunity for the discerning investor to achieve stellar returns while diversifying internationally.

The Dawn of Micro-Multinationals

Micro-multinationals are mid-sized companies expanding beyond their home markets and establishing an international presence. According to an HSBC report, UK-based SMBs generate roughly 66% of their revenues outside their home market. That figure is expected to grow as 83% of SMBs cite overseas expansion as their top priority.

These companies are not just trading with international counterparts but are actively setting up operations in new markets, evolving from import/export entities into truly multinational businesses.

One of the defining characteristics of micro-multinationals is their agility. They are often faster to innovate and more adept at adopting new technologies than more giant corporations. This agility enables them to respond to market changes and capitalize on emerging trends quickly. 

Plus, micro-multinationals tend to focus their value propositions around products or competencies where they have specialized expertise, allowing them to capture niche markets with precision.

Investment Opportunities

Micro-multinationals offer a compelling opportunity for investors seeking higher returns and international diversification. Investing through private markets enables investors to access these high-potential entities with lower capital requirements than traditional investments in large multinational corporations.

Early-stage venture funds return average net annual returns of over 21%, compared to just 12.6% for late and expansion-stage funds. When companies are rapidly growing, their valuations can increase significantly in a relatively short period. Their innovative products or services often cater to a global market, and as they expand internationally, they can achieve economies of scale and access larger customer bases.

Also, micro-multinationals are often pioneers in their industries. Investing in these companies can reap the benefits of first-mover advantage. These companies may introduce new technologies or enter markets that have not yet been saturated, giving them an edge over competitors.

Of course, investing in early-stage micro-multinationals is inherently riskier than investing in established companies. These companies may not have a proven track record, and their success often hinges on the ability to execute their business model effectively. And, since they operate internationally, they are exposed to additional risks such as currency fluctuations, geopolitical tensions, and regulatory changes.

Given the high-risk nature of investing in early-stage micro-multinationals, investors must have a well-diversified portfolio. This can be achieved by spreading investments across different industries, geographic regions, and stages of company development.

Platforms like Gridline are making it easier than ever for investors to tap into the world of micro-multinationals. Gridline offers access to top-tier diversified opportunities vetted and curated by experts, providing investors with the tools they need to capitalize on this emerging international business category.

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