The era of the dot-com darling has long passed and today most technology investors make their money via stakes in large, established firms that have all but cornered their markets. It’s a sound strategy, but one that overlooks opportunities in small- and mid-cap tech firms.

The best tech plays are often large-cap companies with products familiar to most enterprises and consumers. But SolarWinds (NYSE: SWI), a developer of network, storage and virtualization software management products, breaks the mold.

Like most software companies, SolarWinds is a cash cow in the truest sense of the term. On average, the firm generates more than $32 million in free cash flow per quarter—equivalent to 41.5 percent of sales—with operating margins of more than 40 percent.

That impressive cash flow is largely due to the nature of SolarWinds’ business. Software is expensive to develop but cheap to produce because most of these products are delivered to end users via the Internet. But SolarWind’s has also seized upon the best market for its products. Rather than competing with the likes of IBM (NYSE: IBM), SolarWinds focuses on the needs of small- and medium-sized businesses and has established itself as a low-cost software provider.

Buyers of enterprise software must often cut a massive check to the developer and then hire a consultant to manage the long process of installing the new system. SolarWinds’ products, by contrast, can usually be purchases with a corporate credit card and installed by the user in under an hour.

While other software companies have struggled to grow sales amid weak corporate IT spending, SolarWinds’ low-cost solutions have rewarded the firm with reliable revenue streams. Half of the firm’s revenue is derived from recurring maintenance agreements; the other half is generated by initial sales of software licenses. Since going public in the first quarter of 2009, SolarWinds has chalked up annualized compound revenue growth rate of 34 percent.

SolarWind’s balance sheet is solid, with $150 million in cash and equivalents on hand and no long-term debt. The company’s stock has also emerged as a darling among institutional investors. In the first quarter, eight funds initiated new positions in the company and only three funds were net sellers of the stock. All told, mutual funds own more than one-third of available shares.

SolarWinds faces two significant challenges. The affordability of its product is a double-edged sword, making it relatively easy to attract new customers, but also resulting in low switching costs should those customers decide to purchase a competing product. But even these low switching costs should prohibit many cash-strapped It departments from jumping ship in the intermediate-term.

Additionally, two-thirds of the company’s revenue is derived from the US, where economic growth remains lackluster and could slow further. Combating this problem will require a longer-term vision, and SolarWinds is aggressively building a local sales force in countries such as China and Japan.

Nevertheless, SolarWinds offers the potential for attractive long-term growth. It has a strong presence in the small- to medium-sized business market, and has made headway with larger enterprises. With a market cap of just $1.9 billion, the firm is an attractive acquisition target for its larger competitors.