SAP has acquired Prior Labs in order to establish a European frontier AI research laboratory.

      Eighteen months following a €9 million pre-seed investment, TabPFN, based in Freiburg, is set to be acquired by SAP, which has pledged over €1 billion over the next four years. The specifics of the deal remain undisclosed, but the strategic aim is clear.

      When Frank Hutter, Noah Hollmann, and Sauraj Gambhir launched Prior Labs in early 2024, the AI community was focused on nearly everything except the type of data their company specialized in. While language models were garnering funding, attention, and talent, tables—the spreadsheets and structured data that are essential for businesses—were absent from discussions aimed at developing a frontier lab. On Monday, the founders announced that this assumption would now be challenged.

      Prior Labs has entered into a definitive agreement for SAP to acquire it, with the German enterprise software giant committing over €1 billion in the upcoming four years to transform the startup into what it refers to as a globally leading frontier AI lab.

      This investment marks a significant milestone as the most ambitious enterprise AI research initiative ever undertaken in Europe by a European firm. The terms of the transaction have not been made public. SAP’s announcement refers to Prior Labs as the pioneer of Tabular Foundation Models and positions the acquisition as a continuation of the work SAP initiated with its own model, SAP-RPT-1, created before the majority of the enterprise software industry recognized the need for such models.

      Prior Labs will operate as an independent entity, maintaining its brand, its Freiburg headquarters, offices in Berlin and New York, commitment to open-source, customer relationships, and its existing scientific advisory board, which includes notable figures like Yann LeCun and Bernhard Schölkopf. The deal is pending regulatory approval and is anticipated to finalize in the second or third quarter of this year.

      In their joint blog post, the founders characterize the upcoming phase as “the next chapter.”

      What has Prior Labs developed? The rationale for the acquisition is grounded in the technical achievements of the company. Prior Labs’s flagship model, TabPFN, was published in *Nature* in early 2025 and, according to the founders, has been cited over 1,000 times and downloaded more than three million times since its release. The latest version, TabPFN-2.5, expands the architecture to handle datasets of up to 50,000 samples and 2,000 features, and based on Prior Labs’s published benchmarks, it currently leads in TabArena, the standard benchmark for tabular machine learning.

      Importantly, TabPFN performs in a single forward pass, requiring no task-specific training, and achieves or surpasses the accuracy of tuned tree-based models, including AutoGluon configurations that have been run for hours. For the datasets that are prevalent in enterprise systems—such as customer records, financial transactions, manufacturing telemetry, and clinical trial results—this represents a crucial technological turning point.

      A general-purpose model that does not necessitate domain-specific retraining transforms both the cost and deployment timeline for structured-data AI. This, rather than merely the concept of an AI lab, is what SAP is acquiring. SAP’s customer base is focused on exactly the sectors Prior Labs’s models are designed for: financial services, healthcare, manufacturing, and industrials. Constellation Research’s analysis of the acquisition frames it as part of a broader data platform strategy, aligning with SAP’s simultaneous acquisition of Dremio announced that same week.

      The structured-data segment is where most companies still struggle in enterprise AI; with this acquisition, SAP has now secured one of the most credible attempts to address that issue. Prior Labs’s only prior funding round was a €9 million pre-seed announcement made in February 2025, led by Balderton Capital with contributions from XTX Ventures, the Hector Foundation, Atlantic Labs, and Galion.exe.

      Eighteen months later, Balderton’s investment has yielded one of the largest exits in the firm’s 19-year history. While the exact financial details will not be made public until SAP completes its regulatory filings, the leap from a €9 million funding round to a post-acquisition investment of over €1 billion is, by any reasonable assessment, remarkable.

      Why does this matter for European AI? Over the past two years, European AI policy has aimed to create precisely the outcome represented by the Prior Labs deal. TNW has been monitoring this broader initiative, which includes sovereign cloud funding, the compliance framework of the AI Act, and a growing push from European tech leaders for capital to be invested on a large scale within the EU rather than taken abroad.

      The CEO of Mistral has been particularly outspoken regarding whether Europe can create its own AI infrastructure rather than relying on external sources. In one interpretation, the Prior Labs deal provides a clear affirmative response. SAP, now the most valuable publicly traded company in Europe, is using its market value to finance a frontier research