Space Chimps, which opened in the US through Twentieth Century Fox last weekend, taking $7.4m, is the second CG-animated film financed independently by Vanguard Animation.

An initiative of Shrek producer John H Williams and his Vanguard Films, the unit was founded to make a modestly budgeted ($40m), high-quality CG film every two years, backed by a network of international distributors.

The idea is that the profits generated on a lower-budget animated film will be considerable even on a modest box-office return, whereas a studio-produced animated film has to be a massive hit in order to make profit on a typical budget of $150m and a five-year production process.

Distributors assembled by Vanguard and sales partner Odyssey Entertainment for the financing structure include Entertainment Film Distributors in the UK, SND in France, Aurum in Spain, Medusa in Italy, Scanbox in Scandinavia and CJ Entertainment in Korea. The first film, Valiant, which Disney handled domestically, opened in 2005 and grossed more than $60m worldwide.

Unlike Valiant, which was created in London, Space Chimps was shot in Vancouver. The film landed at Fox as part of a four-film deal between the studio and Starz Media-owned IDT Entertainment which acquired a 30% stake in Vanguard in 2003. Starz is fully financing the domestic p&a of Space Chimps with a minimum opening commitment from Fox of 2,500 screens.

'We're building a pipeline of films and it takes us two years to make one of these films from start to finish,' explains Williams. 'We wanted to create an independent finance model for animation.'

Williams believes Valiant was indeed a valiant first effort. 'We never expected it to be a commercial hit but we wanted to do it and got about $12m from UK sources including the UK Film Council. We only had one animatic pass (the process whereby the entire film is reviewed with rough voice-over and hand-drawn animation before production begins in earnest), but we did it on time and on budget. The production values will get better as the films go on.'

Before coming to Los Angeles, Williams' background was in documentaries, TV dramas and commercials. When he relocated from the East Coast in 1994, he decided to focus on features and quickly moved into production on Seven Years In Tibet. He also kickstarted the production process on a film of Jack Kerouac's On The Road (which is finally shooting early next year with Walter Salles directing) and signed one of the first producing deals with DreamWorks SKG in 1996 for live-action and animated films. That deal would go on to yield The Tuxedo with Jackie Chan and the Shrek franchise.

'I always had a great interest in animation but very little working experience in it,' he says. 'Going through the process with DreamWorks on Shrek showed me it was a really collaborative process and I liked and admired the people who worked in it. It's less auteur-driven, less director-centric than most of the live-action feature business. Everybody has a critical role including the producer.'

Williams was not as closely involved on the Shrek sequels, opting instead to raise finance for Vanguard.

Next for Vanguard Animation is Somewhere, a 'freaky, fantastical' version of The Wizard Of Oz to be directed by Mike Johnson (Corpse Bride) as well as The Cosmic Disasters: The Battle Of The Bands Just Got Ugly, a comedy musical being developed with Eurythmics co-founder Dave Stewart.