On Monday, European enterprise software giant SAP announced its intention to acquire German AI startup Prior Labs for an undisclosed amount. Pending regulatory approval, SAP plans to invest €1 billion (approximately $1.16 billion) into the business over the next four years to grow it into an AI lab focused on structured data — the tables and databases where enterprise information typically sits.
Although SAP declined to disclose the acquisition price, sources told Pathfounders that the deal was a healthy exit: an "almost all cash" transaction with well over half a billion dollars in cash up front for the startup's founders — Frank Hutter, Noah Hollmann, and Sauraj Gambhir. The trio co-founded Prior Labs just 18 months ago with a focus on tabular foundation models (TFMs) — AI models that can make predictions from data in tables and databases, potentially a better fit for enterprises than traditional language models.
SAP's Strategic Bet on Structured Data
The acquisition comes at a critical time for SAP, whose stock has dropped significantly in 2026 partly due to the "SaaSpocalypse" — a widespread downturn in SaaS valuations. By investing in Prior Labs, SAP aims to capitalize on AI's untapped potential in enterprise business processes. As OpenAI's COO admitted last February, "we have not yet really seen AI penetrate enterprise business processes." SAP's move directly addresses this gap by building AI tailored to the structured data that powers its widely used software for accounting, HR, procurement, and expense management.
SAP had already developed its own relational pretrained transformer model, SAP-RPT-1. "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," SAP CTO Philipp Herzig declared in a statement. However, Prior Labs' acquisition provides a significant shortcut. Its TabPFN model series has garnered substantial traction among developers, with over three million downloads of its open-source models.
Agentic AI and the NemoClaw Endorsement
While SAP works to create its own AI lab, the company is also playing defense against the rising tide of agentic AI. SAP has blocked OpenClaw and any other agent technology that it has not explicitly authorized, as first reported by The Information. In its latest API policy, SAP "prohibits" AI agents from accessing its products through its API except for those that are "SAP-endorsed architectures." Authorized architectures include SAP's own Joule Agents, still in beta, which let customers create their own agents. Notably, Nvidia announced in March that SAP's Joule supports Nvidia's Agent Toolkit, which is the foundation for Nvidia's enterprise-ready, security-focused method for deploying OpenClaw, called NemoClaw. Hence, SAP customers are authorized to use NemoClaw agents.
This strict approach contrasts sharply with rival Salesforce, another incumbent caught in the SaaSpocalypse. Salesforce allows enterprises to choose their own agents, including OpenClaw if they wish, through its new Headless 360 architecture. SAP's defensive posture signals its desire to control the ecosystem and ensure security and integration, but it also highlights the strategic importance of agentic AI.
Prior Labs: A Rising Star in Tabular AI
Prior Labs was founded in March 2025 by Frank Hutter, Noah Hollmann, and Sauraj Gambhir. The startup focuses on tabular foundation models (TFMs), which are AI models designed to make predictions from data in tables and databases — the format that underpins most enterprise operations. Unlike large language models that excel at unstructured text, TFMs are optimized for the structured data found in spreadsheets and relational databases. This makes them a natural fit for SAP's product suite, which relies heavily on database management.
The startup's TabPFN model series has been widely adopted in the developer community. In a blog post about the deal, the founders noted that their open-source models have been downloaded over three million times. In February 2025, Prior Labs raised approximately $9.3 million in a pre-seed funding round led by Balderton Capital — more than competitor Neuralk-AI but significantly less than Fundamental, which emerged from stealth with a $255 million Series A in February 2025. Balderton partner James Wise called Prior Labs' acquisition "one of Germany's biggest ever venture outcomes."
Investment and Future Plans
Under the terms of the deal, Prior Labs will operate as an independent unit within SAP to maintain research velocity. SAP promises to provide long-term investment and a direct path to productization across the SAP portfolio using SAP AI Core and SAP Business Data Cloud, as well as the agentic layer with Joule. The goal is to develop TFMs that can grab data where it lives, combine that with language, reasoning, and domain knowledge. This integration aims to make SAP's enterprise software smarter and more efficient.
Founder and CEO Frank Hutter celebrated the deal on X, expressing hope that Prior Labs, with this "massive boost" from SAP, could become a new "globally-leading frontier AI lab for structured data — in Europe, in the open." SAP's CFO Dominik Asam had earlier told CNBC that the company's ability to adopt AI technologies quickly in its R&D portfolio is key to maintaining its economies of scale advantage.
SAP Broader AI Strategy
Prior Labs is not SAP's first foray into AI. The German company has invested in several generative AI companies, including backing OpenAI rival Anthropic in 2023, as well as Aleph Alpha and Cohere, which now intend to merge to form "a global AI powerhouse." These investments reflect SAP's recognition that AI is both a threat and an opportunity for an incumbent player. By building its own capabilities and acquiring specialized startups, SAP aims to stay ahead of the curve.
The acquisition of Prior Labs signals a deeper commitment to structured data AI, which many analysts believe holds more promise for enterprise applications than general-purpose language models. With the investment, SAP hopes to accelerate the development of TFMs and integrate them into its core products. Meanwhile, the strict agent policy ensures that SAP retains control over how AI interacts with its ecosystem.
As the tech industry marches toward agentic AI, SAP's dual strategy of building internally and acquiring externally positions it to navigate the disruption. The company's stock is currently trading slightly upwards, suggesting investor confidence in the move. However, the long-term success will depend on how quickly Prior Labs can deliver tangible results and how the agentic AI landscape evolves.
Source: TechCrunch News