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Canadian startups are finding opportunities by cutting out middlemen and bringing analytical insight to inefficient industries.

578foot/Getty Images/iStockphoto

Caithrin Rintoul says he's developing a way for software to talk to dirt.

He's the CEO of Provender, a Montreal-based online marketplace that allows farmers to sell directly to restaurants and other distributors, cutting out middlemen and shortening the distance from farm to table.

"Every farm has a network of people that buy from them," says Mr. Rintoul. "But the power of that network is very limited because they can't see other networks."

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He says the market is kept deliberately opaque by middlemen who "charge a premium for services that aren't pertinent in the twenty-first century."

From farms and factories to film sets, Canadian startups are finding opportunities by cutting out middlemen and bringing big data to inefficient industries.

And those middlemen can eat up a big chunk of prices, especially in the food industry. According to a 2011 study commissioned by farm groups in Manitoba, Saskatchewan and Alberta, post-farm markups added between 60 and 70 per cent to the retail price of fruits, vegetables and meat.

Unlike traditional food brokers, Provende r doesn't buy from farmers and has no warehouses, Mr. Rintoul says. Instead, it sets up transactions directly between farmers and buyers, like chefs. The hope is that farmers will bring their existing networks with them and that those food buyers will use the site's search tools to find other products, he says.

While transactions between producers and buyers who were doing business before they joined the site are free, Provender charges a variable fee of up to 18 per cent on sales that are made between new connections.

"It's incredibly messy to procure locally," says Mr. Rintoul, who previously worked as a cook at well-known Montreal restaurant Au Pied de Cochon and as the co-director of a small farmers market in the city.

For chefs, being able to search online for fresh local foods will "dramatically lower search and discovery costs," he says.

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There are currently around 450 buyers using Provender, which expanded to Toronto, Minnesota and Vermont in August, Mr. Rintoul says, and an increasing percentage of its userbase includes health food stores and companies selling fresh produce baskets.

But it's not just about the marketplace. The site allows farmers to "quantify their inventory" from the seed stage to when the ship it out, Mr. Rintoul says, which provides business intelligence in an industry where quantitative data has traditionally been limited. The biggest opportunity for his company is in giving farmers more data about their customers, allowing them to reduce risk and waste.

Eventually, he says, chefs will be able to essentially plant their own menu. "If Chipotle can source responsibly, then everyone can source responsibly," he says.

Factories may be more high-tech than farms but they're also suffering from a lack of data, says Michael Tatham. He's the CEO of MAJiK Systems, a Waterloo-based startup that's developing a real-time monitoring system for factories.

"Some of the factories we're looking at now are only getting updates once a day," Mr. Tatham says. "Some co-op student is crunching numbers on an Excel spread sheet."

That means factories can't respond to changing conditions, he says. For instance, if one production line is falling behind, an entire shipment could be delayed before management even knows there's a problem.

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Real-time updates can also alert management to quality control issues as they're happening – and lead directly to the source to the problem, Mr. Tatham says.

"You can't improve it if you can't measure it," he says.

It wasn't that long ago that Mr. Tatham and his cofounders were co-op students; he graduated from the University of Waterloo with a degree in management engineering earlier this year. He says that this hands-on experience in factories, coupled with the team's software development knowledge, put the company in a unique position.

"We saw a clear path to solve these problems that we all experienced," Mr. Tatham says.

He says that with the system, factory managers can tell "how much of production time is actually productive," and fix recurring problems.

The system is currently being marketed at smaller and medium-sized factories but it's because smaller companies "are a little more open to working with an earlier stage startup," Mr. Tatham says. The next step, he says, is to continue to develop the analytics and building tools to make use of all this information, which will allow his company to raise prices and open new revenue streams.

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Film sets might be more glamorous than factories but it's a similar story when it comes to technology, some of the production tools have changed but old ways of doing business persist and new ways to gather information aren't being used.

"Some people say a movie takes two years to develop, I think that's B.S.," says J. Joly, the CEO of CineCoup, a Vancouver company that is trying to bring a tech startup mentality to the film industry. "You just have to manage expectations and deliver that movie the audience already wants."

CineCoup's first film, WolfCop, was released in Canadian theatres in early June, just eight months after filming started.

While major studios can spend years developing a film, attaching different directors and ordering rewrites, CineCoup's strategy is to give a film the green light – or not – as quickly as possible.

To do that, he's leveraging social media and analytics to decide which films to back and where they'll be shown.

Mr. Joly describes CineCoup as a "film accelerator," referencing the lessons his company is drawing from Silicon Valley-style startup accelerators (CineCoup itself is the product of Vancouver's GrowLab accelerator).

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But the way the company picks films runs more like a contest, with filmmakers competing to have their film funded and distributed by the company.

WolfCop was selected from one of 10 finalists because its creators built a big, engaged audience on social media.

By "building an audience before funding" a film, rather than using a marketing campaign to entice viewers, Mr. Joly says CineCoup can achieve higher profit margins and take on less risk.

It's something Mr. Joly knows well – he's also the CEO of dimeRocker, a marketing agency with a record of developing social apps and games to promote TV shows and movies to online audiences.

That promise of built-in audience is how he convinced Canada's largest theatre chain to agree to show CineCoup's first film sight unseen. And when it came time to release WolfCop, he used social media analytics to pick the specific theatres where he thought he could draw the largest audience.

Now, CineCoup is moving into television, through a new partnership with the CBC. Called ComedyCoup, it will see a single-camera sitcom developed using the same model. The winner of that competition will get $500,000 to film an episode which will be shown during prime time.

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CineCoup's film and TV efforts are focused on niche markets and genres that are cheap to film, WolfCop was filmed for $1-million.

"We can't do a Game of Thrones, we don't have the money," he says. Even so, the company is promising a bigger share of revenue for the filmmakers whose projects get made through CineCoup.

He says that while each deal will be negotiated individually, he says "it's way better than they would get with a traditional studio" where filmmakers would be "lucky" to see any revenue sharing.

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