First off, the "do" has a missing "loop".
endif() should be endif with no parentheses.
Your functions must be separated from the main program.
Function Init_game() shouldn't be placed where it is, it's also missing an
endfunction.
If your intention was to call the InitGame() function, then you should call it by using InitGame(),
not Function InitGame()
There are also some logic errors, specifically with your
if spacekey() statement. If the intention is to wait for the user to press the space key to continue, then you should add a condition for this. As it is, the program will not give a chance to press the space bar and it will continue until it crashes when it finds function in the middle of the code.
I made some updates to get you on the right track.
load image "media\backdrops\Starting_Screen copy.png", 11
if stage = 0
paste image 11, 100, 100,1
repeat : until spacekey()
stage = 1
endif
if stage=1
`Function Init_game()
Init_game()
endif
end ` End Program
Function Init_game()
` Function code
ENDFUNCTION
CSL