SAP Acquires Prior Labs for Over €1 Billion: The 18-Month Startup Journey That Built Europe's New Frontier AI Lab

The 18-Month Journey: €9 Million Pre-Seed to Billion-Euro Exit

Prior Labs raised only €9 million in a single pre-seed round in February 2025 from investors including Atlantic Labs, Balderton Capital, Galion.exe, XTX Ventures, and the Hector Foundation . Just 18 months after founding—and roughly 15 months after closing that round—the company exited to SAP for over €1 billion . Investor Balderton Capital called it "one of Germany's biggest ever venture outcomes" . According to multiple reports, the three founders—Frank Hutter, Noah Hollmann, and Sauraj Gambhir—reportedly cleared over half a billion dollars in upfront cash .

Operating Independence

Under the terms of the agreement, Prior Labs will continue to operate independently under its own brand and leadership following the acquisition . SAP's German-language press release states the lab will act as an independent unit to preserve its research culture . The company will retain its headquarters in Freiburg, Germany, alongside its offices in Berlin and New York City .

The Core Technology: Tabular Foundation Models

The technology driving the deal is TabPFN (Tabular Prior-data Fitted Networks), a class of AI model purpose-built for structured, tabular data—rows and columns of business transactions—rather than freeform text . Unlike traditional machine learning that requires weeks of training on each dataset, TabPFN uses in-context learning: you show it a table, and it can predict, classify, or reason on that data almost immediately . SAP CTO Philipp Herzig framed this as targeting the largest untapped opportunity in enterprise AI—applying foundation models to the structured data that underpins global business operations .

Platform Integration

Prior Labs' TFMs are being integrated across three core SAP platforms:

• SAP AI Core — the underlying AI infrastructure layer.
• SAP Business Data Cloud (BDC) — ensuring structured enterprise data flows into agent-ready intelligence .
• Joule — SAP's AI copilot and agent platform. More than 50 Joule assistant agents and over 200 specialized AI agents are being woven into SAP's new Autonomous Suite .

This integration allows Prior Labs' technology to "reason with precision" on enterprise transaction data, bridging the gap between SAP and non-SAP data sources .

Europe's Pre-eminent AI Research Lab

The acquisition establishes Prior Labs as "one of Europe's pre-eminent AI research labs" . SAP framed it as creating a globally leading frontier AI lab in Europe, bringing together world-leading TFM research talent under Professor Frank Hutter with SAP's vast enterprise data and distribution . The €1 billion investment commitment over four years provides the infrastructure, hiring, and long-term research budget needed to compete at the frontier of AI research .