SAP Invests €1.16 Billion in German AI and Secures Its Ecosystem

SAP Invests Heavily in German AI

Last February, the Chief Operating Officer of OpenAI acknowledged that artificial intelligence had not yet truly integrated into the business processes of companies. However, for SAP, a giant in enterprise software, this integration is crucial, especially after a significant drop in its stock in 2026, partly due to the "SaaSpocalypse."

On Monday, SAP announced its intention to acquire Prior Labs, a German startup specializing in AI, for an undisclosed amount. Subject to regulatory approval, SAP plans to inject 1 billion euros (approximately 1.16 billion dollars) into this company over the next four years. The goal is to transform Prior Labs into an AI lab dedicated to structured data, which is essential for storing business information.

Details of the Acquisition and SAP's Strategy

Although SAP did not disclose the exact amount of the acquisition, sources close to the matter told Pathfounders that the deal was primarily in cash, with over half a billion dollars paid upfront to the founders of Prior Labs: Frank Hutter, Noah Hollmann, and Sauraj Gambhir.

Founded just 18 months ago, Prior Labs has focused on tabular foundation models (TFMs), which are AI models capable of making predictions from data present in tables and databases. These models may be more suitable for businesses than language models, making them a strategic choice for SAP, whose software is widely used for accounting, human resources, procurement, and expense management.

SAP Secures Its Ecosystem Against Unapproved Agents

SAP also appears to be adopting a defensive stance as the tech sector shifts towards agent-based AI. Alongside the creation of its own AI lab, SAP has decided to block OpenClaw and other unauthorized agent technologies. This decision was initially reported by The Information.

In response to a request for comment, SAP's press office directed TechCrunch to its current API policy, which states that SAP "prohibits" AI agents from accessing its products via its API unless they are "architectures approved by SAP."

SAP-Approved Solutions

Among the authorized architectures is Joule Agents, a SAP offering still in beta, which allows customers to create their own agents. In March, Nvidia announced that SAP's Joule supports Nvidia's Agent Toolkit, an agent management software. This toolkit is the foundation of the security-focused, enterprise-ready competitor to NemoClaw developed by Nvidia. Thus, SAP customers will be able to use NemoClaw agents.

AI: An Opportunity and a Challenge for SAP

For SAP, artificial intelligence represents both a threat and an opportunity. "It all depends on how quickly we, as SAP, can also adopt these technologies into our R&D portfolio to maintain our relative advantage in economies of scale," said CFO Dominik Asam to CNBC in January.

SAP has not remained idle. The company has invested in generative AI companies developing both large and small language models. In 2023, it supported OpenAI rival Anthropic, as well as Aleph Alpha and Cohere, which plan to merge to form "a global AI powerhouse."

Development of AI Models at SAP

SAP has also developed SAP-RPT-1, a pre-trained relational transformer model. "From the beginning, SAP recognized that the biggest untapped opportunity in enterprise AI was not large language models; it was AI designed for the structured data that drives the world's businesses," said SAP CTO Philipp Herzig in a statement.

The acquisition of Prior Labs represents a significant shortcut in this direction. Its series of TabPFN models has been well received by developers. According to a blog post about the deal, the startup's open-source models have been downloaded over three million times.

A Promising Future for Prior Labs

In a press release, SAP promised that Prior Labs would maintain its open-source releases: "The lab will operate as an independent unit to ensure research speed, while SAP will provide long-term investment and a direct path to productization through the SAP portfolio with SAP AI Core and SAP Business Data Cloud, as well as the agent layer with Joule."

SAP and the Freiburg-based startup in Germany hope that this investment will lead to TFMs capable of extracting data from the tables where it resides, combining it with language, reasoning, and industry knowledge.

SAP and Prior Labs' European Ambitions

More than that, they hope that Prior Labs, with this "massive boost" from SAP, can become a new "world-class AI lab for structured data — in Europe, transparently," celebrated founder and CEO Frank Hutter in a post on X.

In February 2025, the startup had previously raised about 9.3 million dollars in a pre-seed funding round led by Balderton Capital — more than its competitor Neuralk-AI, but much less than Fundamental, which emerged from the shadows with a 255 million dollars Series A funding round in February.

In a post on X, Balderton partner James Wise called the acquisition of Prior Labs "one of the greatest venture capital successes ever achieved in Germany." As for SAP, its stock is currently trading slightly higher.

A Different Strategy from Salesforce

Meanwhile, SAP is very strict about the agents it will allow in its ecosystem. This represents a radically different approach from Salesforce, another major player caught in the SaaSpocalypse. Salesforce allows companies to choose their own agents, including OpenClaw if they wish, with its new Headless 360 architecture.