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 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.
For a giant incumbent player like SAP, AI is both a threat and an opportunity. '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,' CFO Dominik Asam told CNBC in January.
SAP hasn't been sitting on its hands. The German company invested in generative AI companies that develop language models large and small: In 2023, it backed OpenAI rival Anthropic — as well as Aleph Alpha and Cohere, which now intend to merge to form 'a global AI powerhouse.'
It had also developed SAP-RPT-1, a relational pretrained transformer model. '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.
But Prior Labs' acquisition is a significant shortcut in that direction. Its TabPFN model series has experienced a lot of traction among developers. In a blog post on the deal, the startup's founders said that its open source models have been downloaded over three million times.
In a press release, SAP promised that Prior Labs will maintain the open source versions: 'The lab will operate as an independent unit to ensure research velocity while SAP provides long-term investment and a direct path to productization across the SAP portfolio with SAP AI Core and SAP Business Data Cloud as well as the agentic layer with Joule.'
SAP and the startup headquartered in Freiburg, Germany, hope that this investment will lead to TFMs that can grab data in the tables where it lives, combine that with language, reasoning, and domain knowledge.
More than that, they hope that 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,' founder and CEO Frank Hutter celebrated in a post on X.
In February 2025, the startup had previously raised some $9.3 million in a pre-seed funding round led by Balderton Capital — more than competitor Neuralk-AI, but a lot less than Fundamental, which emerged out of stealth with a $255 million Series A in February.
In a post on X, Balderton partner James Wise called Prior Labs' acquisition 'one of Germany's biggest ever venture outcomes.' As for SAP, its stock is currently trading slightly upwards.
Meanwhile, SAP is being very strict as to the agents it will allow into its ecosystem. This is a wildly different approach than Salesforce, another incumbent caught in the SaaSpocalypse. It is allowing enterprise to choose their own agents, including OpenClaw if they so wish, with its new Headless 360 architecture.
To understand the significance of this acquisition, it is important to look at the broader context of enterprise AI and the so-called SaaSpocalypse. The term refers to a downturn in software-as-a-service valuations starting in 2025, driven by rising interest rates and market saturation. SAP's stock declined sharply during this period, putting pressure on the company to innovate. The investment in Prior Labs represents a strategic pivot towards specialized AI for structured data, which is the backbone of enterprise operations. Tabular foundation models differ from large language models by focusing on numeric and categorical data, making them more accurate for tasks like fraud detection, supply chain forecasting, and customer segmentation. Prior Labs' TabPFN model, based on the Prior-Data Fitted Networks architecture, is designed to handle small to medium-sized datasets with high efficiency, often outperforming traditional machine learning methods.
Frank Hutter, a renowned computer scientist and professor at the University of Freiburg, brought deep expertise in automated machine learning (AutoML) to the startup. Co-founders Noah Hollmann and Sauraj Gambhir, both researchers in the field, complemented his vision. Their work prior to Prior Labs included contributions to the Neural Architecture Search (NAS) and Bayesian optimization communities. The startup's rapid growth, reaching millions of downloads within 18 months, indicates strong product-market fit in a niche that larger AI labs had overlooked. SAP's acquisition thus not only provides a technological edge but also secures a team that understands the nuances of enterprise data.
The decision to restrict agent access is equally telling. By allowing only NemoClaw agents — a variant of the open-source OpenClaw framework, hardened for enterprise use by Nvidia — SAP aims to control security, compliance, and data governance. This contrasts with Salesforce's more liberal 'headless' approach, which empowers customers to choose any agent architecture. The difference reflects their respective risk profiles: SAP serves large, regulated enterprises in industries like manufacturing, banking, and healthcare, where data breaches or agent malfunctions could be catastrophic. Nvidia's involvement adds credibility, as its Agent Toolkit provides monitoring, logging, and validation layers that meet enterprise standards. OpenClaw, while powerful, has been criticized for its lack of guardrails, making it unsuitable for mission-critical applications without significant customization.
Looking ahead, the Prior Labs lab will operate independently in Freiburg, maintaining its research culture while benefiting from SAP's global reach and financial resources. The lab is expected to release new versions of TabPFM under an open-source license, fostering a community of developers who can adapt the models to various business verticals. SAP also plans to integrate the models into its Business Technology Platform, including SAP AI Core and SAP Business Data Cloud, enabling customers to build custom AI solutions using structured data. The agentic layer with Joule will allow these models to interact with other systems through natural language interfaces, potentially transforming how employees query databases or automate workflows.
The deal has been praised by European venture capitalists as a validation of the region's AI ecosystem. Balderton Capital's James Wise highlighted that it is 'one of Germany's biggest ever venture outcomes,' underscoring the potential for European startups to achieve significant exits without relocating to Silicon Valley. For SAP, the acquisition is a hedge against disruption from cloud-native competitors like Workday and ServiceNow, which have been faster to adopt generative AI. It also positions SAP to compete with hyperscalers like Microsoft and Google, who are investing heavily in enterprise AI tools. However, the success of Prior Labs will depend on whether SAP can execute product integration without stifling the startup's agility — a common pitfall in large company acquisitions.
In summary, the $1.16 billion bet on Prior Labs is a calculated move by SAP to lead in structured data AI, while the strict agent policy reflects its cautious stance on security. The combination of a cutting-edge TFM startup with SAP's distribution and Nvidia's enterprise agent framework could reshape how companies interact with their data. As the SaaSpocalypse continues to pressure incumbents, such strategic plays may determine which legacy companies survive the AI transformation.
Source: TechCrunch News