Tim Waterstone drops backers

Former bookseller Tim Waterstone has decided to dump two key institutional backers who helped him get started in the bookselling business in the early 1980s when he launches his new high-street retail chain next year.

The team financing his latest venture - a children's emporium to be called Daisy & Tom - will not include the venture capital company 3i or National Westminster Bank, which gave him the initial seed capital for Waterstone's Booksellers.

Instead he is relying on venture capital firm Quester and Dundee comics publisher DC Thomson, whose titles include Beano and Dandy, to help him come up with the pounds 5m he needs for his first two children's stores.

Mr Waterstone and Thomson will each hold 37 per cent of the company, and Quester the remaining 26 per cent. The two companies joined Waterstone's after 3i took its stake and Nat-West put up a government- backed loan in 1982. Neither of the snubbed backers was prepared to comment at the weekend.

Mr Waterstone said the decision was based on the close relationship he has with the man- agements of Thomson and Quester. The new stores are said to be named after his young- est daughter and the son of one of his new partners.

The original bookshop, founded for about pounds 100,000, grew into a chain that was worth pounds 40m by the time it was sold in 1993 to WH Smith, which had fired Mr Waterstone the year before he went into business.

Mr Waterstone says the first two Daisy and Tom shops will open in London and either Edinburgh or Glasgow next year, with two more following each year after that. Retail analysts described the concept as interesting but said Daisy & Tom would have a tough time in a crowded market. "Selling children's goods requires an understanding of the psychology and fashions of both mothers and children," said one.

Mr Waterstone said he was confident of success. With eight children from three marriages, he claims to be an expert on shopping for children.

The shops will aim to include everything from children's shoes and clothes through toys and videos to school supplies and, of course, books for children up to nine years old. Entertainment, such as puppet shows, and services such as hairdressing are also under consideration.

The formula for Daisy & Tom, like the one for Waterstone's, is borrowed from the US, although Mr Waterstone says that in America it is limited to the lower end of the market.

His stores, modelled on fairs and circuses, will be more "glamorous" and "theatrically designed," he said. It will be "a small child's idea of heaven: formal waiters, milk shakes in tumbling colours, jars of cookies, everything luxurious, with a slightly old-fashion, retro feel. And no pop music." Each outlet will be three times the size of the largest of his old bookshops.