External Financing of Swedish Living Labs

Abstract: The building and housing sector is often described as one of the most conservative sectors within society and is today facing a slow technical progress and a significant difference between technically possible solutions and socially accepted ones. An initiative trying to solve this problem by decreasing the lead times within this sector is KTH Live-In Lab, a living lab that is supposed to open during fall 2017. As KTH Live-In Lab is a new concept, the labs management has not yet decided how the lab should work with external funding. The purpose of this study is to investigate if and how Swedish living labs should work with external financing when funding their everyday business and at the same time manage to ensure increased innovation and societal impact. In order to do this, the study investigates suitable market positions, possible value propositions and different sources of external funding that would suit Swedish living labs. This study has been carried out using an inductive research approach and the results have been based upon an extensive literature review as well as fourteen semi-structured interviews held with potential stakeholders to KTH Live-In Lab. Overall, this study concludes that it is possible for Swedish living labs, and more specifically KTH Live-In Lab, to use external funding and still be able to ensure increased innovation and societal impact. This by adopting a market position as a demonstration arena or a test bed and communicate the economical aspects of participating and the possibilities for co-creation with other actors. In order to create a sustainable financial framework, it is further suggested that a variety of external funding methods should be used. When identifying suitable external investors, two factors were considered: the external financier’s requested return on investment as well as its overall objectives for funding KTH Live-In Lab. This induce that governmental funding, industry funding as well as crowd funding are suitable means to fund the overall business of KTH Live-In Lab as well as its projects. This as neither of these methods require ownership or a degree of influence that decrease KTH Live-In Lab’s ability to make a societal impact. However, this suggestion also includes having a network of private equity investors as well as lenders connected to the lab.