With modern packaging, new recipes and a tv marketing campaign, the Menachos parlayed these ancient remedies into Mushu, S.A., an herbal tea company whose annual sales by 1996 topped $800,000. Mushu's line of medicinal teas for everything from insomnia to colds, flu and upset stomachs is now sold in supermarkets throughout Peru.

"These products have been used locally for years --we've just blended and packaged them to make them attractive to people who are not traditional users," explained MŪnica Menacho. "When we started doing trade shows, people would pass by our stand and say to us, ėmy grandmother used to give me this when I was young,' and they'd smile and buy it."

Now the Menachos have added yet another modern ingredient --an equity investment-- and today Mushu is preparing to launch a line of teas onto the international market.

Mushu is typical of the kind of medium-sized businesses sought after by the MIF's new venture capital funds: an up-and-coming firm with a solid track record and dynamic ownership. The Peruvian venture capital fund Fondo de Asistencia a la PequeŅa Empresa (FAPE) bought 40 percent of Mushu with a $150,000 equity investment in 1997. The money is being used primarily for working capital, production equipment, market studies, visits to trade shows, and packaging and marketing for export. Current plans call for expanding the product line from 5 to 19 products, both teas and capsules, and marketing under the name "Inca Secret" in three U.S. cities, as well as in four Latin American nations.

"An equity investment enables you to take a deep breath on the beach after you've been swimming by yourself for a long time," explains Alfredo Menacho, an anthropologist by trade whose studies led him to start Mushu. "It gives you the solvency and peace of mind to push your projects ahead."

The Menachos continue to think ahead, just as they did when they took the leap of faith to start their business six years ago. Mushu currently purchases two to three tons of herbs monthly, but anticipating a potential export windfall, the Menachos are consolidating long-term supply arrangements with peasant farmers in the CaŅete Valley, 200 km south of Lima.

"If you want to sell to international markets, you have to be ready to meet the demand. It isn't incremental; it takes off in a flash," explains MŪnica Menacho. "Right now, we're more concerned about getting our roots down as a company than in making bigger profits. Our goal is to have a highly respected and well-positioned product on the market. And we're having a lot of fun just making it work."