Well, first off, an SMB is a small to medium-sized business, a classification conjured up by industry analysts varying from 0–50, 100, 250 employees depending on your analyst du-jour.
And while a venture-style business is at its nascent stage small, and would potentially fit the description, it is bound to grow quickly and explicitly funded to produce venture-style returns (say, 7x on money-in in 7 years). Hence, the popular confounding of SMB with start-ups yields much depravity of reason for the intended success and outcomes of either.
To put it differently.
An F1 race-car is a car. A Pinto is a car too. An F1 race-car is like a startup, meant to drive very fast down a trajectory built for speed. A Pinto is like an SMB, a small car built for comfort and hauling passengers and groceries covering a lot of lands. While they both have four wheels and carry the same primary classification, the wheels are where their similarities begin and end.
Similar to the difference between a startup and an SMB. Both start small, but the expected risk, growth, and size of a startup is fundamentally different.
With that in mind, now on to the investor side of things. The value of innovation is determined by the normalization of truth the innovation attaches to. A startup expected to produce venture-style returns must attach to a timely, new and unprecedented normalization of truth upstream, where an SMB connects to an existing normalization of truth downstream, a sub-optimization of sorts.
Hence, the risk profiles and thus the expected returns (even in the growth stage of either) depends on the type of company you are starting and the normalization such innovation attaches to. The nomenclature of an SMB tech company you refer to is (merely) a small technology company, the Pinto, not to be confounded with an F1 race-car. And no venture investor in dire need to produce venture-style returns will in his right mind invest in an SMB.
As an entrepreneur, be forewarned: whenever you see people confound an SMB with a startup means they intrinsically do not understand the difference between an F1 race-car and a Pinto. I suggest you ignore the advice stemming from such depravity. Including going down the path of well-intended but poorly suited government SBIC programs unable to support, in the car allegory, the needs and requirements of an F1 race-car.
You get my point: an SMB is built for comfort, not for speed.
