B. Flexible and collaborative approach to financing
A flexible and collaborative approach to financing is also crucial. What do each of you need to make it work?
• In your respective countries (with regard to any grants, soft loans and subsidies)?
• For your respective companies from a business perspective?
• What is each partner prepared to contribute in terms of deficit finance?
• What will be the initial split of rights before you both go out to raise additional finance and what are you prepared to both concede in terms of dilution of equity if a third party is needed to close the gap?
• Are you all agreed on the most appropriate distributor?
• If either can make a direct pre-sale in a major territory (U.K., Germany or France), are the terms acceptable to you both? What percentage of pre-sale in relation to the budget triggers the rest of the finance?
• Which territorial rights will you wish to keep for yourselves -- if any?
• Are you being realistic in terms of what you wish to retain as rights, given the level of third party finance you might require?

Make sure that you both "get it" -- i.e. the humour, the pacing, the direction, the target audience, the market you are aiming for. The best projects are those where all the partners are clear on the above and where the characters or concept transcends specific cultural "quirks" and will hopefully touch an international nerve or funny bone.

There can be no hidden agendas or objectives. It's like a marriage -- if there are problems, they need talking out and resolving; if something the other partner or partners is doing is irritating or unacceptable, it should not be allowed to fester. Be clear about respective roles.

Varga's flexibility and versatility help make them a successful co-production partner. Lisa. © Happy Life, Varga Budapest and RTL Klub.

Co-Development and Co-Production -- A Growing Trend
Having read this far, one might wonder that any co-production ever happens! Yet they do in increasing numbers, driven by economic necessity, the need to spread risk and also to increase access to good ideas and material.

It helps that certain broadcasters across Europe are prepared for the right projects, on an albeit limited basis, to invest as co-producers (BBC, ITV, ZDF, Nickelodeon U.K., Disney Channel France, Fox Kids in Europe, Cartoon Network Europe...). However, the burden of raising finance rests more and more on financial producers and distributors and the production companies themselves.

In today's market place, a European animation production company, unless it only wishes to operate on a "work for hire basis," must have financial muscle to develop and co-produce and retain rights, without this it is very vulnerable. The studios which are capable of this have either (i) raised equity investment into their companies from financial investors (ii) are subsidiaries of larger corporations which have financial firepower (iii) have access to the bespoke animation equity investment funds and/or (iv) can access significant subsidy finance.