SILICON VALLEY, CA (By Matt Marshall, Mercury News) January 26, 2006 — When Alberto Herrera started his own tech company in Tijuana two years ago, he was confident he had the knowledge to take on the risk.

His team had worked at Panasonic's office in the Mexican border city and had the technical expertise to craft a new kind of wireless sensor network -- one that can be used for hotel room key cards and turn on the heating system once a customer has entered his or her room.

But Herrera didn't have contacts with venture capitalists and didn't know how to spiff up a business plan.

That changed last year, once his company, Medida, started working with the Mexico-Silicon Valley Technology Business Accelerator (TechBA for short) in San Jose, funded by an annual $6 million grant from the Mexican government.

TechBA assigned a special adviser to Medida, to mentor it in Silicon Valley's arcane ways.

The help is part of an effort by the Mexican government to jump-start its technology economy -- in part through better connections to leading tech centers like Silicon Valley and their entrepreneurial cultures and practices.

Mexico's domestic information technology and software market totals more than $3 billion a year and has 2,095 companies, according to its economics ministry.

Mexico exports about $400 million in technology services each year to the United States, about half in business process outsourcing, half in software outsourcing. But Mexico wants to do more than supply its northern neighbor with a cheap source of labor, says Jorge Zavala, chief executive of TechBA. "The question is, how do we switch from low value-added services and move into information technology?''

The goal of TechBA, he said, is to help create Mexican companies that own their own technology, and to export $5 billion in technology and other services by 2012.

In Herrara's case, TechBA appointed a mentor -- Adolpho Nemirosky, an Argentine entrepreneur who has worked in the valley's semiconductor and telecom industries for 13 years. He had co-founded a venture-backed company, Xtreme Logic, and was eager to help others. He is paid a stipend by TechBA.

His help has already gone a long way. Nemirosky taught Herrera how to make an elevator pitch -- that is, a two- to five-minute synopsis of his company, tailored for impatient investors. He advised him to focus on specific areas, such as sensor systems for hotels and for entertainment software. And he took Herrera to meet with some professors at the University of California-Berkeley, where Herrera was able to secure a technology adviser.

To top it off, Nemirosky groomed Herrera to present to venture capitalists Tuesday evening at an event hosted by TechBA and an angel group called Silicom Ventures. Besides the investors, a live audience of more than 200 people looked on. And Herrara performed well enough that three of four venture capitalists invited him to talk with them further. "I'm very pleased with him,'' Nemirosky said of his protege.

Currently, 40 companies participate in the TechBA program, and the group recently announced its first tangible success: Mexican company JackBe. The company, which has created Web sites for Sears and Citigroup's Mexico operations, raised $6.5 million in venture capital funding in November -- the first Mexican tech company to raise venture capital from the United States, according to TechBA's Zavala.

There are other signs of late that the U.S. venture capital market is waking to not only to Mexico, the world's ninth largest economy, but also to the fast-growing Hispanic market in this country.

Sausalito venture firm Sienna Ventures is now raising $100 million for its newest fund to focus on the Hispanic market.

Herrera's company, Medida, meanwhile, is expanding in the United States. It has $1 million in revenue after a year's work, 10 employees and an office in San Jose, where employees can drop in from Tijuana. Silicon Valley is a good place to develop contacts for customers, said Herrera.

"We've gained visibility that would otherwise be very hard to get,'' he said.

One of his customers is XaviX, which makes interactive sports games and also has offices in San Jose. Medida provides XaviX wireless sensors for its newest fly-fishing game -- where the sensor detects when game players flick their wrists and feeds information back to the game.

Mexico is just the latest country trying to develop a network here in Silicon Valley.

Gadi Behar, managing director of Israeli-focused Silicom Ventures, has reached out to groups from Canada, Argentina, Brazil, the Netherlands and Hawaii, offering help such as crash courses on Silicon Valley's business culture. "They all want access to Silicon Valley,'' agreed Michelle Messina, a public relations professional who has also helped companies in these groups.

Contact Matt Marshall at 408-920-5920 or via his blog at www.SiliconBeat.com