By OpenAI COO’s own admission last February, “we have not yet really seen AI penetrate enterprise business processes.” But for enterprise software giant SAP, whose stock has dropped significantly in 2026 in part from the “SaaSpocalypse,” the issue is still front and center.
On Monday, the European heavyweight 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.
SAP declined to disclose how much it spent on the acquisition itself, but sources told Pathfounders that this was a healthy exit: an “almost all cash” deal, 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 that sits in tables and databases. This is potentially a better fit for enterprises than language models. It is certainly a better fit for SAP, whose widely used software products for accounting, HR, procurement and expense management rely on its database.
However, Germany’s most valuable company also seems to be playing defense as the tech industry marches toward agentic AI. While it works to create its own AI lab, the company has blocked OpenClaw and any other agent tech that it has not explicitly authorized, The Information was first to spot.
In response to a request for comment, SAP’s press department referred TechCrunch to the company’s latest API policy, which does say that SAP “prohibits” AI agents from accessing its products through its API except for those that are “SAP-endorsed architectures.”
Authorized architectures of course include SAP’s own offering, Joule Agents, still in beta, which lets customers create their own agents. Nvidia also announced in March that SAP’s Joule supports Nvidia’s Agent Toolkit, which is software for managing agents. This toolkit is the foundation for Nvidia’s enterprise-ready, security-focused method for deploying OpenClaw, NemoClaw. Hence SAP customers will be authorized to use NemoClaw agents.
Background on SAP and enterprise AI
SAP has long been a dominant player in enterprise software, with its core products used by the majority of Fortune 500 companies. However, the rise of cloud computing and AI has forced the company to adapt rapidly. The “SaaSpocalypse,” a term used to describe the market correction in software-as-a-service valuations in 2025-2026, has hit SAP hard, with its stock declining significantly. To counter this, SAP has been investing heavily in AI, particularly in generative AI and structured data models.
The company previously backed AI startups such as Anthropic, Aleph Alpha, and Cohere, which are now merging to form a global AI powerhouse. SAP also developed its own model, SAP-RPT-1, a relational pretrained transformer model. As SAP CTO Philipp Herzig stated, “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.”
What is Prior Labs and why does it matter?
Prior Labs was founded in Freiburg, Germany, in late 2024 by machine learning researchers Frank Hutter, Noah Hollmann, and Sauraj Gambhir. The startup specializes in tabular foundation models (TFMs), which are AI models designed to work with structured data such as that found in databases and spreadsheets. Unlike large language models (LLMs) that process text, TFMs can understand relationships between columns and rows, making predictions and generating insights directly from tabular data.
Their flagship product, TabPFN, is an open-source model that has been downloaded over three million times. It uses prior-fitting neural processes to learn from small datasets and make accurate predictions without extensive fine-tuning. This is particularly useful for enterprise applications where data is often sparse or noisy.
The acquisition by SAP gives Prior Labs a massive boost. The startup’s founders expressed excitement, with CEO Frank Hutter posting on X: “Prior Labs, with this massive boost from SAP, can become a new globally-leading frontier AI lab for structured data — in Europe, in the open.”
The investment will allow Prior Labs to operate as an independent unit within SAP, maintaining its open-source versions while gaining access to SAP’s vast customer base and data infrastructure. The lab will focus on creating models that can combine tabular data with language, reasoning, and domain knowledge, enabling more intelligent enterprise applications.
The agentic AI landscape
SAP’s strict stance on AI agents reflects a broader trend in enterprise software. As companies like Salesforce adopt a more open approach with their Headless 360 architecture, allowing enterprises to choose their own agents including OpenClaw, SAP is taking a more controlled path. By blocking unauthorized agents and only allowing those that are SAP-endorsed, the company aims to maintain security and compliance for its customers.
This strategy is a double-edged sword. On one hand, it gives SAP control over the user experience and ensures that agents meet enterprise security standards. On the other hand, it may limit innovation and frustrate customers who want to use the latest agent technologies. However, with the integration of Nvidia’s Agent Toolkit and NemoClaw, SAP is positioning itself as a leader in enterprise-grade agentic AI.
Financial and market implications
The acquisition of Prior Labs is a significant bet for SAP. While the upfront purchase price was not disclosed, sources indicate it was well over half a billion dollars, with the total investment reaching €1 billion over four years. This is a healthy exit for the founders and early investors like Balderton Capital, which led a $9.3 million pre-seed round in February 2025.
Compared to other startups in the tabular foundation model space, Prior Labs had raised relatively little before this acquisition. Competitors like Fundamental emerged from stealth with a $255 million Series A in February 2026. However, Prior Labs’ unique approach and open-source traction made it attractive to SAP.
Following the announcement, SAP’s stock traded slightly upwards, indicating investor confidence in the deal. The acquisition is also a win for the European AI ecosystem, demonstrating that significant AI outcomes can happen outside of the US and China.
The future of enterprise AI
The partnership between SAP and Prior Labs signals a shift in how AI is applied to business processes. While LLMs have captured public attention, enterprise data is overwhelmingly structured — in tables, databases, and spreadsheets. By investing in TFMs, SAP is betting that the next wave of AI innovation will come from models that can understand and reason with this type of data.
As CFO Dominik Asam told CNBC in January, “It’s all about how quickly [we can] as SAP actually also embark [on] these technologies in our R&D portfolio to keep the relative economies of scale advantage.” With Prior Labs, SAP gains not only a team of world-class researchers but also a direct path to productization across its portfolio, including SAP AI Core, SAP Business Data Cloud, and the Joule agent layer.
The success of this venture will depend on how well SAP can integrate Prior Labs’ technology into its existing products while maintaining the open and independent nature of the lab. If successful, it could set a new standard for enterprise AI, proving that structured data is the next frontier.
Source: TechCrunch News