Tech tank: the Mexican government helps homegrown tech companies reach international markets.

In a small office in Tijuana, Alberto Herrera directs a group of 13 people in the development of wireless sensor networks, one of 10 technologies that will change the world, according to MIT Technology Review.

Herrera is general director and president of Medida, a Mexican company that just two years after its inception has managed to conquer 2% of the global market in applications for sensor networks, a market now valued at US$350 million. Demand for such software is expected to grow to $8 billion by 2010. The networks make it possible for machines alone to acquire quantities of data, store, analyze, transfer and communicate it all remotely and wirelessly. "As much as the Internet has allowed people to communicate with more freedom, this technology--also called Internet zero or interdevice networking--makes it possible for machines to relay their status or take commands," says Herrera.

Medida, for instance, has designed a device that is inserted into interactive electronic games where the player uses a fishing pole. A sensor detects when the user hooks a virtual fish on a screen, and how much strength the player needs to use to reel in his catch. Medida has been trying to go into international markets for new customers and to raise capital, and that struggle has been a bit easier since February 2005, when it joined the Technology Business Accelerator (TechBA), a program of the Mexican Secretariat of the Economy that tries to help high-tech companies get into international markets, mainly the United States.

TechBA now has two such accelerators in the United States, one in Silicon Valley and the other in Austin, Texas, in operation since February and December of 2005, respectively. The program provides an office in either location, a group of skilled and specialized advisors, and financing, if needed, to participating companies.

Thanks to TechBA contacts, Medida last year became a supplier for Japanese game maker XaviX, which develops and markets technology that allows human interaction with a given medium, for instance, an intelligent scale that measures weight, water content and fat percentage of up to four people, individually. "This information is sent through a console, so that users can see the data on a television screen, how the data changes over time, and plan their health in a more controlled way," Herrera says.

In 2005, Medida invoiced XaviX more than $300,000 and received additional work orders for approximately $600,000. Last year, the Mexican company's gross sales were over $500,000, but it expects to post $50 million in revenues in the next four years. "It is highly possible to make that kind of revenue on this technology," Herrera says, considering factors such as the level of integration of the technology, its size, processing speed and price.

As for TechBA, Herrera is equally positive. "You are adding an intelligence group to your strategy and that changes your global vision of doing business" he says. "On the other hand, being in Silicon Valley is being at the world's door, a place where you can reach a different level of customer."

At TechBA's first iteration, 25 companies were selected, while 31 joined at the second meeting. A third meeting was held in January 2006. Companies come from a variety of Mexican cities, and they hail from different sectors, such as biotechnology and voice over Internet, or using the Web to make phone calls. In 2005, the Mexican Secretariat of the Economy gave $3 million to the program. The acceleration process lasts one year, but it can be extended if the participating company's project so requires.

"We want to end the perception abroad that there are no high technology firms in Mexico," says Alejandro Gonzalez, who heads the government's economic office for small and medium businesses. The accelerators also look to help companies to get financing through venture capital.

Jackbe, a company that offers Internet-based applications and services for companies including Telcel, McKesson and Pinnacle--services such as password protection and monetary transactions--belongs to the first TechBA generation, and last year it took in U.S. venture capital of $6.5 million. "In other countries, it is very common that companies raise international risk capital, but in Mexico we still don't have that culture," Gonzalez says.

Arkus, a software developer and second-generation TechBA company, posted revenues of $200,000 in 2005, up 30% from a year before, but expectations in this three-year-old company are high. "By the end of 2006 we expect to have gross revenues of $500,000, and TechBA is a critical factor in achieving that goal," says Jorge Arroyo, a director at Arkus. Currently, 25% of its customer portfolio is made up of U.S. clients and 75% from Mexico, but the goal is to reverse that ratio.

"Mexicans have great talent and success. We have a lot to offer in terms of a model that can generate significant growth for the country. It would be ideal if the rest of the world would see Mexico as a technology supplier," Arroyo says. Access to a research network and international contacts is a great advantage for a small company such as Arkus, he says. "We've been assigned top-drawer consultants, like Javier Quezada, a former manager of NEC's regional sales, and Luis Villegas, ex director of Cintra investor relations. Personalized direction multiplies the chances of success," he says.

Laboratorio de Soluciones Geneticas (LSG) in northwestern Mexico, which also participates in TechBA, is a leader in the development and application of molecular biology techniques, targeting industrial and health sectors. "We achieved a strategic alliance with BC Manufacturing in order to attract American and European companies in the biomedical sector so they establish activities in Tijuana. We offer integrated shelter services at an international level at a lower cost than what they pay at their original locations," says Marco Santillan, administrative director and strategic planning for LSG. Diego Guerena, LSG general director, says the accelerator is helping the company to reach major markets. "TechBA is helping us to get ready for the U.S. market," he says. "Our intention is to offer outsourcing services."

Model success. TechBA in Austin bases its operation on the Austin Technology Incubator (ATI) model, while the TechBA in Silicon Valley uses The Enterprise Network model, which has been used successfully in the past to support young companies including eBay and Credence Technologies. "In the past 13 years, ATI has graduated 75 companies and has worked with over 150. These graduated firms have reached revenues of over $1.50 billion, generating 2,700 direct jobs and 7,500 indirect jobs" says Sid Burback, associate director for Instituto IC2 at the University of Texas. TechBA-Austin is among the ATI facilities, and IC2 provides support for business development, administration strategies and management, among others.

Together with the Fundacion Mexico-EE.UU. para la Ciencia, a non-government organization created through an agreement between both nations to promote and support science and technology cooperation, the Mexican government foresees becoming a high technology provider and leaving manufacturing behind.

"The purpose of TechBA is to drive business growth in order to begin doing technology development in a completely foreign market," says Rodrigo Gutierrez, director of Centris, an incubator head-quartered in Tijuana that specializes in high-tech companies. "I think they are achieving their mission and are on the way."

MARISOL RUEDA * TIJUANA