Baltimore buys 3.75% of a local watchmaker for $275K
What's the deal? The Baltimore Development Corp.Dealroom has a profile for this one. Try Dealroom → (BDC), the city's quasi-governmental economic development arm, invested $275,000 in the Baltimore Watch Company, a small Hampden-based watchmaker formerly known as Tsao BaltimoreDealroom has a profile for this one. Try Dealroom →. The sum buys a 3.75% stake — the largest single direct investment the BDC says it has made in a private company.
Why now? The watchmaker was mid-raise on a $2.5 million round when founder Alan Tsao heard the BDC was looking to back a unique, minority-owned business. The city has the firepower: Mayor Brandon Scott's office carved out a $15 million economic development fund for the BDC in the current budget.
What's the endgame? BDC president and chief executive officer Otis Rolley called the deal the "first of many to come" under a new strategy. His goal: within five years, the BDC will stop drawing from city coffers and instead pump money into them. He pointed to a missed opportunity — years ago, the BDC made a small business loan to Under ArmourDealroom has a profile for this one. Try Dealroom →, rather than an equity investment.
About the company: Founded by Baltimore native Tsao, the company sells watches with region-inspired designs, including a limited-edition Old Bay model. It grew from his home to a storefront and now a 7,100m² — a 7,100-square-foot — space at Union Collective. The business has nine employees and plans to grow to 12 to 15 next year, following its acquisition of Maryland Watch Works.
What could go wrong? Direct government equity in private firms is unusual and untested at this scale for Baltimore. The real question is whether public capital can earn returns while advancing local business goals.
The signal: The size of the check matters less than the city's willingness to take equity at all. Direct government investment in companies is not unheard of — the federal government took a 10% stake in Intel last year to support domestic chipmaking — but Baltimore's move tests whether a city can act like a venture investor in its own backyard. "Getting the backing of the city is incredible," Tsao said.
Read more: thebanner.com
Image credit: Generated with Gemini
