When you say market, you mean the size of your potential customer base as a percentage of New Zealand's population? I've thought of this, and New Zealand does have a small population, but the internet has a
large population, and it is there that I shall establish my startup. If your product is digital, you can sell to anyone, no matter their distance.
I'm not in New Zealand now, but I expect to move there at year's end. (It's my wife's home.) I'll keep an eye on this thread, because I'm also interested in what the startup scene is like in New Zealand. It'd be nice to have a little preexisting knowledge of the industry when I got there.