How a German AI Lab Went From Research Project to $1.1 Billion SAP Exit in 18 Months

Jan de Vries · 2026-07-17

Eighteen months. That's all it took for Berlin-based Prior Labs to go from a research project to a $1.1 billion acquisition by software giant SAP. It's the kind of story that makes you sit up and pay attention. Not just because of the money—though that's impressive—but because it shows what happens when you build the right technology for the right moment. The startup, which focuses on a specialized type of AI called tabular foundation models (TFMs), announced today that SAP has completed its acquisition. The deal includes more than $1.1 billion in investment to fund infrastructure, hiring, and long-term research. And here's the kicker: Prior Labs will keep its own brand, leadership, and research agenda. It'll continue publishing its work and making its models openly available. That's rare in an acquisition. ### From $9.7 Million to $1.1 Billion Just a year before this deal, Prior Labs raised a $9.7 million pre-Seed round in 2025. That's a massive jump in valuation in a very short time. "Eighteen months ago, Prior Labs was a research project," says Frank Hutter, co-founder and CEO. "Today we're beginning our next chapter as an AI lab with the resources to tackle problems we simply couldn't before." Hutter explains that taking tabular foundation models to the next level requires better data environments, deployment surfaces, and long-term research investment. SAP, he says, is uniquely positioned to provide all of those things. ### What Are Tabular Foundation Models? You've probably heard a lot about large language models—the technology behind ChatGPT and similar tools. But Prior Labs took a different path. Instead of focusing on text, they built AI specifically for structured data. Think spreadsheets, databases, and the kind of information that powers enterprise operations. Their model, TabPFN, uses a single pre-trained foundation model that can handle prediction tasks like: - Payment delays - Customer churn - Supplier risk - Demand forecasting It does this directly from structured enterprise data, without needing a separate AI model for every dataset. The technology is already being used in real-world applications. It's helping Hitachi prevent train failures, improving financial forecasting with TD Bank, and has been applied in hundreds of research projects—from pancreatic cancer diagnosis to wildfire prediction to next-generation battery materials. ### Why SAP Went All In Philipp Herzig, CTO of SAP, puts it plainly: "Early on, SAP recognized that the greatest untapped opportunity in enterprise AI wasn't large language models; it was AI built for the structured data that runs the world's businesses." He adds that Prior Labs has defined the category of TFMs and built the world's strongest research team in that space, topping public benchmarks since day one. This acquisition follows substantial investment in European infrastructure needed to train, deploy, and govern enterprise AI. EU-Startups' 2026 coverage shows about $2.1 billion across comparable companies, led by Nscale's $1.8 billion AI-compute round and Verda's $108 million financing. ### What This Means for European AI Germany has produced several direct competitors in this space, including Berlin-based SPREAD, Cognee, and Qorelo, as well as Stuttgart's Blockbrain and Munich's Interloom. But Prior Labs' exit to SAP signals something bigger. It shows that European AI startups can build world-class technology and attract serious investment from global enterprise players. The acquisition allows Prior Labs to pursue multi-year frontier research programs that would have been out of reach for an 18-month-old company. Access to enterprise data environments and long-term investment means they can tackle more ambitious projects across: - Enterprise AI - Scientific discovery - Causality and relational data - Agentic systems They're even talking about "moonshots" in areas like medical data and material sciences. ### The Bottom Line Prior Labs was founded in 2024 by Frank Hutter, Noah Hollmann, and Sauraj Gambhir. In less than two years, they built a category-defining AI company and exited to one of the world's largest software companies. It's a reminder that the best startups don't just follow trends—they create new ones. And sometimes, the most valuable innovation isn't the flashiest technology. It's the one that solves the most fundamental problems. For enterprise AI, that means working with the structured data that already runs the world's businesses. Prior Labs proved that approach works. SAP is betting it'll define the next decade of enterprise technology.