During 2012 a project entitled "Development of State Systems of Innovation" in the State of Mexico was started. The project, which is not over yet, is funded by the Inter-American Development Bank (IDB) and has the general objective to increase the innovation capacity of small and medium enterprises located in the State of Mexico via collaboration with technology development centers, universities and local governments making up the State Innovation System. To achieve this goal several sectors were identified, sectors that should be promoted in the State of Mexico include: chemical, pharmaceutical, plastics, floriculture, food processing, logistics, information technology and advanced manufacturing. Within the various stages in which the project is being developed and focusing in the advanced manufacturing sector this article will depict the steps of: sector dialogue and identification of opportunities for innovation. In the first stage of sector dialogue the aim was to bring together all players and establish the advanced manufacturing capabilities to determine which technological innovation capabilities they have. In the second stage, the aim is in the identification of innovation projects which could be carried out and write proposals to get public funding of at least 50% of projects 'budget. All projects submitted by the companies are required to be made in partnership with two other actors in the innovation system, one of which must be a research center or university. Up to now three projects got funding for development during 2013, efforts to get more funding continue.