You need to add the following 3 registry keys (run / regedit):
HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Microsoft SQL Server\MSSQL11E.LOCALDB\MSSQLServer\DefaultData, HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Microsoft SQL Server\MSSQL11E.LOCALDB\MSSQLServer\DefaultLog, HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Microsoft SQL Server\MSSQL11E.LOCALDB\MSSQLServer\BackupDirectory
With the name of an existing folder as the value (where you have write access), for example. "C: \ Databases".
Please read the excellent step-by-step instructions in the section http://www.roelvanlisdonk.nl/?p=2896 (from where I copied the answer).
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