Many investors would argue that small-cap stocks are more nimble than their large-cap counterparts, making them quicker to adapt to economic downturns and periods of recovery.

That's particularly true in the case of small-cap tech stocks, where innovation and flexibility provide opportunities for rapid growth.

Small-cap tech stocks may provide significant opportunities for investors, but the trick is determining which ones are primed for growth. For Mark Conley, director of research at Broadpoint AmTech, companies with strong product cycles are especially attractive.

"The companies with the better products are always going to gain share," he said in an interview with CNBC.

"As some of the bigger technology companies have less room to grow, they will look for potential acquisition candidates. The logical companies to acquire are the ones gaining the most and with the best products."

So which small-cap tech stocks have attractive prospects? For ideas, we crunched some numbers on institutional flows and identified a few standouts (data sourced from Reuters).

These are the tech stocks hedge funds are buying like crazy -- what do you think of them? (Click here to access free, interactive tools to analyze these ideas.)

1. eMagin Corp (Nasdaq: EMAN): Market cap of $155M. eMagin is the first and only manufacturer of active-matrix Organic LED (AM-OLED) microdisplays on silicon. These displays perform at low-power levels, extended temperature ranges, and provide image performance not possible with LCD technologies. Institutional investors currently own 2,302,090 shares vs. 720,421 shares held three months ago (219.55% change).

2. AudioCodes Ltd (Nasdaq: AUDC): Market cap of $240M. AudioCodes was established in 1993 as a research and development project-oriented company utilizing voice compression technology applications for a variety of markets including wireless communications, semiconductors, and data communications. Institutional investors currently own 11,403,973 shares vs. 8,476,463 shares held three months ago (34.54% change).

3. GSI Technology (Nasdaq: GSIT): Market cap of $250M. GSI Technology is a leading edge supplier of low power, full featured, high performance SRAM technology. Institutional investors currently own 9,074,163 shares vs. 7,515,080 shares held three months ago (20.75% change).

4. Westell Technologies (Nasdaq: WSTL): Market cap of $237M. Westell designs carrier-class equipment that delivers high-speed communications for telecommunications operators and Internet service providers throughout North America and Europe. Institutional investors currently own 27,322,305 shares vs. 24,110,626 shares held three months ago (13.32% change).

5. Axcelis Technologies (Nasdaq: ACLS): Market cap of $275M. Axcelis Technologies, is a world-leading provider of equipment and services to the semiconductor manufacturing industry. Institutional investors currently own 66,500,122 shares vs. 60,255,766 shares held three months ago (10.36% change).

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research. Note: The numbers on top of items represent the forward P/E ratio, if available.

Kapitall's Eben Esterhuizen does not own shares of any companies mentioned.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.