In my opinion, the successful small caps are not the competitors of the large caps. They are companies which provide supplementary goods or services. They serve in a niche market that the large caps have somehow under represented. Thats the main reason why they are good bolt-on M&A targets.

Good small caps may be few because they are very likely to be bought out.
Many people cash in their millions as soon as they can. It takes a visionary and a lot of hardwork to turn a small company into a large cap. I don't endorse Tesla because of the valuation, but I happened to read the book about Elon Musk. He, too, sold a few of his start-ups before he launched Tesla.