The importance for companies in knowledge or technology intensive industries to take part in research partnerships has been thoroughly researched, and the gain of collaboration with external parties has been proven. One of these most influential collaboration types is the one between academia and industry, where the US Bayh-Dole Act provided a break-through policy change for the transfer, conversion and commercialization of knowledge and innovations. To counter this, the European Union has implemented a policy around a facilitating, user-centered milieu for innovation called Living Labs. In this article, the purpose is to identify potential collaboration barriers in the university-industry collaboration when implemented in this milieu. This is done by using a multiple case study where the respondents are seven individuals, from three Living Lab entities and two companies. The findings show that the inclusion of users give the setting its advantage, but also gives additional management needs, something that applies to all participants in the setting – the company representatives must have a diverse set of abilities, the researchers should be standalone and independent from the Living Labs management, the management must establish a shared physical context for all parties to interact within and there must be a very clear agreement between all parties what there are expecting from the collaboration regarding outcomes, process and structure.