SAP has acquired Prior Labs to establish a leading AI research lab in Europe.

      Eighteen months following a €9 million pre-seed round, TabPFN, a Freiburg-based innovator, is being acquired by SAP and is set to receive over €1 billion over the next four years. While the terms remain undisclosed, the strategic intent 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 specific type of data their company specializes in. Language models were attracting funding, attention, and graduate students, while tables—essential for running businesses—were absent from the AI discourse aimed at creating a state-of-the-art lab. On Monday, the founders indicated that this notion is about to be challenged.

      Prior Labs has entered into a definitive agreement to be acquired by SAP, with the German enterprise software giant committing over €1 billion over the next four years to develop the startup into what it envisions as a leading global frontier AI lab. This investment is, by a significant margin, the most ambitious enterprise AI research funding ever made in Europe by a European company.

      The terms of the transaction have not been made public. In its announcement, SAP refers to Prior Labs as a leader in Tabular Foundation Models and presents the acquisition as a continuation of its earlier efforts with a model named SAP-RPT-1, which was developed before most of the enterprise software industry became aware of the category.

      Prior Labs will operate as an independent legal entity, maintaining its brand, headquarters in Freiburg, offices in Berlin and New York, open-source commitments, customer relationships, and its existing scientific advisory board, which features prominent figures like Yann LeCun and Bernhard Schölkopf.

      The acquisition is subject to regulatory approval and is expected to be finalized in the second or third quarter of this year. In their joint blog post, the founders used the notably straightforward term "the next chapter" to describe the next steps.

      What has Prior Labs actually developed? The justification for the acquisition lies in its technical achievements. Prior Labs’ 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, extends its architecture to handle datasets with up to 50,000 samples and 2,000 features and, based on Prior Labs’ published benchmarks, currently leads TabArena, the key benchmark for tabular machine learning. Notably, TabPFN delivers capabilities that most foundation models lack; it operates in a single forward pass without the need for task-specific training, achieving accuracy that matches or surpasses that of fine-tuned tree-based models, including AutoGluon configurations that have undergone extensive training.

      This capability is particularly significant for datasets prevalent in enterprise systems, such as customer records, financial transactions, manufacturing telemetry, and clinical trial outputs, representing a technological turning point. A general-purpose model that does not require domain-specific retraining transforms both the cost and deployment timeline for structured-data AI.

      This ability is what SAP is ultimately acquiring, as its enterprise customer base aligns perfectly with the categories Prior Labs’ 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 simultaneous acquisition of Dremio, announced in the same week.

      SAP has acquired one of the most credible attempts to address the difficult aspects of structured-data integration, an area where many companies struggle. Prior Labs' previous funding round consisted of a €9 million pre-seed funding in February 2025, led by Balderton Capital, with participation from XTX Ventures, the Hector Foundation, Atlantic Labs, and Galion.exe.

      Eighteen months later, Balderton's investment has resulted in one of the cleaner exits in the firm's 19-year history. While precise financial details will not be disclosed until SAP's regulatory filings are updated, the leap from a €9 million round to a €1 billion-plus post-acquisition investment program represents, in any rational evaluation, an exceptional outcome.

      Why is this noteworthy for European AI? European AI policy has been striving for precisely the kind of result the Prior Labs acquisition symbolizes over the last two years. TNW has been monitoring the broader efforts, which include sovereign cloud initiatives, the compliance framework of the AI Act, and a growing push from European tech leaders to ensure capital is utilized within the EU rather than being diverted elsewhere.

      The CEO of Mistral has been particularly vocal about whether Europe can develop its own AI infrastructure instead of relying on external sources. The Prior Labs acquisition can be seen, in one interpretation, as a definitive answer. SAP, now the highest-valued publicly listed company in Europe, is leveraging its market capitalization to fund a leading research lab in Europe, led by a European founding team,