Enterprise software giant SAP is making a bold move to strengthen its position in the artificial intelligence race, announcing plans to invest €1 billion (approximately $1.16 billion) over the next four years into Prior Labs, a German AI startup founded just 18 months ago. The acquisition, pending regulatory approval, signals SAP’s determination to lead in enterprise AI at a time when the company faces mounting pressure from what industry observers have dubbed the ‘SaaSpocalypse’ — a period of declining stock performance and growing competitive threats.

Prior Labs was co-founded by Frank Hutter, Noah Hollmann, and Sauraj Gambhir with a specialized focus on tabular foundation models (TFMs), a category of AI designed to build predictions from structured data stored in tables and databases. This approach is seen as particularly well-suited for enterprise environments, where critical business information — from accounting and HR to procurement and expense management — resides in structured formats rather than free-form text. SAP declined to disclose the exact acquisition price, but sources familiar with the deal described it as an ‘almost all cash’ transaction, with well over half a billion dollars paid upfront to the founders.

The startup’s TabPFN model series has already gained significant traction among developers, with its open source versions downloaded more than three million times. SAP has committed to maintaining these open source offerings while integrating Prior Labs as an independent research unit. The lab will operate with research velocity in mind, while SAP provides long-term investment and a direct path to productization across its portfolio through SAP AI Core and SAP Business Data Cloud.

SAP CTO Philipp Herzig emphasized the strategic rationale behind the acquisition, stating that the company recognized early on that the greatest untapped opportunity in enterprise AI was not large language models but AI purpose-built for the structured data that powers the world’s businesses. The investment aims to produce TFMs capable of extracting data from tables and combining it with language understanding, reasoning, and domain expertise — a combination that could transform how enterprises interact with their own information.

The deal also comes as SAP takes a notably restrictive approach to third-party AI agents accessing its ecosystem. Unlike competitor Salesforce, which has adopted a more open stance with its Headless 360 architecture — allowing enterprises to choose their own agents, including OpenClaw — SAP has blocked unauthorized agent technology from interfacing with its products through its APIs. The company’s policy explicitly prohibits AI agents from accessing its systems except those built on ‘SAP-endorsed architectures.’

Authorized architectures include SAP’s own Joule Agents, currently in beta, which enables customers to build custom agents. In March, Nvidia announced that SAP’s Joule platform supports Nvidia’s Agent Toolkit, the foundation for NemoClaw — Nvidia’s enterprise-ready, security-focused competitor to OpenClaw. This means SAP customers will be permitted to deploy NemoClaw agents within the ecosystem.

Prior Labs had previously raised $9.3 million in a pre-seed funding round led by Balderton Capital in February 2025. Balderton partner James Wise called the acquisition ‘one of Germany’s biggest ever venture outcomes’ in a post on social media. The founders and SAP share an ambitious vision: to transform Prior Labs into a globally leading frontier AI lab for structured data, based in Europe and committed to open research. SAP’s stock was trading slightly upward following the announcement.