Enterprise software giant SAP has made a bold bet on artificial intelligence, announcing plans to acquire the German startup Prior Labs and invest roughly $1.16 billion (€1 billion) over four years to build a dedicated AI lab. The lab will focus on tabular foundation models (TFMs)—AI models specifically designed to analyze and predict from structured data stored in tables and databases, which form the backbone of most enterprise operations.
Aiming to transform enterprise AI
The acquisition, disclosed on Monday, underscores SAP's determination to stay ahead in the rapidly evolving AI landscape. While the exact purchase price for the 18-month-old startup was not revealed, sources told Pathfounders it was an “almost all cash” deal exceeding half a billion dollars upfront. The founders—Frank Hutter, Noah Hollmann, and Sauraj Gambhir—stand to benefit significantly. Prior Labs had raised only $9.3 million in pre-seed funding in February 2025, making this exit one of Germany's largest venture outcomes.
Prior Labs specializes in TFMs, with its TabPFN model series gaining traction among developers—downloaded over three million times. These models are built to handle the kind of structured data that enterprises rely on for accounting, HR, procurement, and expense management. SAP's revenue management and its widely used software products depend heavily on such data. By integrating Prior Labs' expertise, SAP aims to create models that not only understand structured data but also combine it with natural language processing, reasoning, and domain-specific knowledge.
SAP's Chief Technology Officer, Philipp Herzig, emphasized the company's early recognition that the greatest untapped opportunity in enterprise AI lies not in large language models (LLMs) but in AI tailored for structured data. The acquisition provides a “massive boost” toward that goal, as Frank Hutter, CEO of Prior Labs, noted in a post on X. The lab will operate as an independent unit to maintain research velocity, while SAP provides long-term investment and a path to productization across its portfolio using SAP AI Core, SAP Business Data Cloud, and the agentic layer Joule.
Defensive moves in the age of agentic AI
While SAP invests heavily in internal AI capabilities, it is also taking a defensive stance against external agent technologies. The company has updated its API policy to explicitly prohibit AI agents from accessing its products unless they are part of “SAP-endorsed architectures.” This move, first spotted by The Information, effectively blocks general-purpose agent frameworks like OpenClaw from operating within SAP's ecosystem.
However, SAP has authorized Nvidia's NemoClaw—a security-focused method for deploying OpenClaw agents—through the Nvidia Agent Toolkit, which is now supported by SAP's Joule Agents (still in beta). This means SAP customers can use NemoClaw agents, but only those built on approved architectures. The approach stands in stark contrast to Salesforce, another incumbent caught in the so-called “SaaSpocalypse” of declining software-as-a-service valuations. Salesforce has adopted a more permissive policy, allowing enterprises to choose their own agents—including OpenClaw—via its new Headless 360 architecture.
SAP's CFO Dominik Asam had earlier indicated that the company’s strategy revolves around rapidly embedding new technologies into its R&D portfolio to maintain economies of scale. The Prior Labs acquisition and the selective agent authorization reflect a careful balancing act: SAP is both embracing AI innovation and exerting control over its ecosystem to protect its core business.
Prior Labs' rapid rise and open-source commitment
Prior Labs was founded in Freiburg, Germany, just 18 months ago with a clear mission: advance TFMs. The startup's open-source models have seen over three million downloads, a testament to their utility. In a blog post about the deal, the founders confirmed that the open-source versions of TabPFN would be maintained under SAP's ownership. This commitment to openness is crucial for developer trust and community growth.
The startup’s pre-seed round was led by Balderton Capital, with James Wise, a partner at the firm, hailing the acquisition as one of Germany's biggest venture exits. Prior Labs had faced competition from Neuralk-AI and Fundamental, with the latter emerging from stealth with a $255 million Series A in February 2025. Despite being smaller, Prior Labs' technology resonated with SAP's vision.
Broader AI investments and industry context
SAP has not been idle in AI. Since 2023, it has backed multiple generative AI companies, including Anthropic (an OpenAI rival), Aleph Alpha, and Cohere—the latter two now planning to merge into a “global AI powerhouse.” Internally, SAP developed its own model, SAP-RPT-1, a relational pretrained transformer model for structured data. But the Prior Labs acquisition represents a significant shortcut, bringing proven expertise and a growing developer ecosystem.
The timing is critical. SAP's stock has dropped significantly in 2026, partly due to the “SaaSpocalypse” that has hit enterprise software valuations. AI is seen as both a threat and an opportunity. By doubling down on structured data AI and selectively opening its platform to agentic technologies like NemoClaw, SAP hopes to reposition itself as a leader in the next wave of enterprise technology.
Observers note that SAP's strict agent policy could alienate some customers who favor flexibility, but it also provides a controlled environment that may appeal to risk-averse enterprises. As the industry debates the role of open versus closed agent ecosystems, SAP is clearly betting on a curated approach—one that prioritizes security and integration with its own stack.
The announcement boosted SAP's stock slightly, signaling investor optimism. With the Prior Labs acquisition pending regulatory approval, the enterprise software giant is laying the groundwork for an AI-powered future—one built on tables, databases, and sanctioned agents.
Source: TechCrunch News