SAP has acquired Prior Labs to establish a cutting-edge AI research laboratory in Europe.

      Eighteen months following a €9 million pre-seed funding round, Freiburg-based TabPFN's pioneer is set to be acquired by SAP, which will invest over €1 billion over four years. While the specific terms remain under wraps, the strategic purpose is clear.

      When Frank Hutter, Noah Hollmann, and Sauraj Gambhir established Prior Labs in early 2024, the AI landscape was focused on nearly everything except the type of data their company centered on. Investments, attention, and talent were gravitating towards language models, leaving structured data such as spreadsheets and records—essential for business operations—out of the AI discussions that aimed to create an advanced lab. On Monday, the founders revealed that this assumption is poised to be challenged.

      Prior Labs has finalized an agreement to be acquired by SAP, with the German software giant committing more than €1 billion over the next four years to develop the startup into what it terms a globally leading frontier AI lab. This initiative represents the most ambitious investment in enterprise AI research ever made in Europe by a European company.

      The financial details of the transaction remain undisclosed. According to SAP’s announcement, Prior Labs is recognized as the pioneer of Tabular Foundation Models, and the acquisition is presented as a continuation of SAP's earlier efforts that began with a model called SAP-RPT-1, developed before the enterprise software sector acknowledged the category.

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

      In their blog post, the founders described the forthcoming phase as “the next chapter”.

      What has Prior Labs actually accomplished?

      The rationale for the acquisition lies within the technical achievements. Prior Labs's leading model, TabPFN, was released in Nature in early 2025, and according to the founders, it has been cited over 1,000 times and downloaded more than three million times since its launch. The latest iteration, TabPFN-2.5, enhances the architecture for datasets containing up to 50,000 samples and 2,000 features, ranking at the top of TabArena, the established benchmark for tabular machine learning.

      Importantly, TabPFN operates with a single forward pass, eschewing task-specific training while achieving accuracy comparable to or surpassing that of optimized tree-based models, including AutoGluon settings that may run for hours. For the types of datasets prevalent in enterprise systems—customer data, financial transactions, manufacturing telemetry, clinical trial results—this represents a key technological moment.

      A general-purpose model that doesn't require domain-specific retraining significantly alters both the cost and the timing for deploying structured-data AI. This, far more than just the idea of an AI lab, is what SAP is acquiring. SAP's enterprise clients lie at the heart of the categories that Prior Labs’s models target: financial services, healthcare, manufacturing, and industrial sectors. Constellation Research's analysis of the acquisition views it as part of a broader data-platform strategy, alongside SAP's concurrent acquisition of Dremio announced that same week.

      The structured-data layer is an aspect of enterprise AI where many companies still struggle; SAP has now secured one of the most credible initiatives aimed at addressing this challenge.

      Prior Labs's previous funding event was a €9 million pre-seed round declared in February 2025, spearheaded by Balderton Capital and joined by XTX Ventures, the Hector Foundation, Atlantic Labs, and Galion.exe.

      Now, eighteen months later, the Balderton investment has resulted in one of the most straightforward exits in the firm's 19-year history. The precise financial details will not be public until SAP’s regulatory filings are updated following the announcement, but the leap from a €9 million round to a €1 billion-plus post-acquisition investment program is, by any rational assessment, remarkable.

      Why is this significant for European AI?

      For the past two years, European AI policy has aimed to achieve the kind of outcome represented by the Prior Labs acquisition. TNW has been monitoring a broader initiative involving sovereign cloud awards, the AI Act’s compliance framework, and an increasingly evident push from European tech leaders for capital to be invested on a large scale within the EU, rather than being sent abroad.

      Mistral’s CEO has notably voiced concerns about whether Europe can develop rather than lease the AI infrastructure necessary for its economies.

      From one perspective, the Prior Labs acquisition provides a clear answer. SAP, now the highest-valued publicly listed company in Europe, is utilizing its market position to support a leading research lab in Europe, founded by a European team, based in a German university city, and focused on the precise AI category that aligns with the businesses SAP