To strengthen Europe’s industrial base and global competitiveness, Framework Programme 10 (FP10) and the European Competitiveness Fund (ECF) must deliver tangible value to companies, especially startups and scaleups that drive innovation, and established industries that must continuously adapt. Living Labs provide a proven, business-relevant instrument to reduce risk, accelerate innovation cycles, and shorten time-to-market, while aligning company innovation with EU priorities.
For startups and scaleups, the greatest challenge is not ideation but validation and scaling. Living Labs offer real-world environments where companies can test products, services, and business models with real users under real conditions, before committing significant capital. By examining real impact in real life, Living Labs can also be used to pivot new ideas for the same product, or a total new idea or product, maximizing the testing.
Through structured co-creation with citizens, customers, acedemia, public authorities, and industry partners, Living Labs enable startups and scaleups to validate product–market fit early and iteratively; reduce technical, market, and adoption risks, derisking innovation; generate evidence and performance data valued by investors and customers; and access early adopters and reference customers, including cities and public organisations.
When municipalities, hospitals, utilities, or regional authorities participate in Living Labs, they often move beyond testing roles to become early adopters, reference customers, even possibly first buyers or partners in innovation procurement. This early public demand strengthens credibility, provides initial revenue stability, and signals market viability to investors and private clients. In this way, Living Labs can transform public procurement into a strategic mechanism for scaling European innovation while supporting competitiveness and public-sector modernisation. By embedding innovation into operational contexts – such as cities, healthcare systems, industrial sites, or agricultural settings – Living Labs dramatically increase the likelihood that startups and scaleups reach successful market entry and sustainable growth.
For established companies and industrial players, Living Labs offer a structured pathway to test and deploy innovation without disrupting core operations. They provide a neutral, multi-stakeholder space where new technologies, digital solutions, and sustainable processes can be piloted before full-scale industrial rollout. The benefits for Industry include a reduced investment risk when introducing disruptive technologies; faster innovation cycles through real-life experimentation; improved acceptance of new solutions by users, workers, and communities; and opportunities to collaborate with startups and scaleups in open innovation settings. Living Labs thus support industrial transformation while preserving competitiveness, resilience, and workforce trust.
Through learning processes embedded in real-life contexts, companies gain a better understanding of user practices, operational constraints, and latent demand. This learning can reveal new insights about the market and often leads to the emergence of new business ideas, alternative applications, or adjacent markets that were not visible at the outset of the innovation journey.
FP10 aims to increase the impact of EU R&I funding by strengthening deployment and scale-up. Living Labs contribute directly by functioning along the whole “innovation journey” from early experimentation to large-scale demonstration.
As hybrid Research and Technology Infrastructures, Living Labs provide companies with access to testing facilities, user communities, data, and regulatory learning opportunities. For businesses participating in FP10 projects, this can translate into higher-quality outcomes, faster commercialisation, and reduced failure rates.
The speed and nature of innovation challenge regulators to protect markets and public safety while enabling growth. As highlighted in the Draghi Report, Europe must improve its regulatory environment and mobilise instruments such as the proposed European Competitiveness Fund (ECF) to close its innovation and scale-up gap. In this context, Living Labs play a key role as regulatory learning environments, providing real-world testing grounds where companies, regulators, public buyers, and citizens can co-create solutions and regulatory approaches. This collaborative experimentation helps reduce regulatory uncertainty, identify barriers and opportunities, support innovation-friendly standards, and align innovation with market and societal needs. By generating evidence through iterative testing and stakeholder engagement, Living Labs can inform more agile and adaptive policymaking, accelerate the uptake of innovative technologies, and create a more predictable environment for companies to invest, scale, and compete globally. Policymakers should therefore support the development of Living Labs alongside regulatory sandboxes to foster a regulatory framework that strengthens competitiveness while ensuring societal value and public trust.
Both FP10 and the ECF prioritise leadership in green and digital technologies. Living Labs allow companies to test climate-neutral, digital, and zero-pollution solutions in real conditions, ensuring they are scalable, compliant, and socially accepted. For companies, this means faster access to emerging markets driven by sustainability and digitalisation, while reducing reputational and deployment risks.
In the current global race, speed is a metric of competitiveness. Living Labs allow companies to move from the lab to a real-world setting (a city, a hospital, a factory) much earlier in the cycle. By testing with real users under real conditions, companies can pivot early, preventing the costly mistake of scaling a product that doesn’t fit the market.
Living Labs translate European policy ambitions into practical business advantages. For startups, they lower barriers to market entry, de-risk innovation, and reduce the time-to-market; for scaleups, they accelerate growth and investor confidence; for industry, they enable safe and efficient transformation. By embedding Living Labs more strongly in FP10 and the European Competitiveness Fund, Europe equips its companies with a powerful tool to innovate faster, scale smarter, and compete globally.
Written by: Martina Desole
Director
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