Rob Adams, a leading US entrepreneur who spent two weeks in New Zealand mentoring local businesses and investors last year, says Kiwi start-ups need to spend more time validating their markets before investing large sums of cash into creating products.

The Texan, who specialises in the so-called "market validation" process, is returning to this country next month for another stint as Auckland business incubator The Icehouse's Entrepreneur in Residence.

Speaking from New Mexico, Adams said market validation involved proving there would be demand for a product before it was created.

"It's like a big test before you spend the real money," he said.


While in New Zealand, Adams will hold a series of market validation workshops in Auckland, Tauranga, Wellington and Christchurch.

Icehouse chief executive Andy Hamilton agreed that local start-ups needed to put more effort into validating their markets.

"It's a fundamental discipline," Hamilton said. "It's a really hard thing to do, but it shortens time frames ... and guarantees a better chance of success."

Adams, who began his career with US software firm Lotus in the early 1980s and has been involved with more than 40 companies since, said that during his visit last year he was struck by the amount of early-stage capital available to New Zealand entrepreneurs.

"If I was going to start something early-stage right now, I think I'd start it in New Zealand rather than in the US," he said.