SAP Invests $1.16B in 18-Month-Old Prior Labs AI Startup
Enterprise software leader SAP faces challenges with AI adoption in business operations. OpenAI's COO noted last February that AI has not yet truly entered enterprise processes. SAP's shares fell sharply this year amid the SaaSpocalypse affecting software firms.
On Monday, SAP revealed its plan to buy German AI firm Prior Labs for an amount not disclosed. Subject to regulatory clearance, SAP will pour €1 billion, about $1.16 billion, into the company across the next four years. The goal is to develop it into an AI lab specializing in structured data, such as tables and databases common in business settings.
SAP kept quiet on the purchase price. Sources informed Pathfounders that founders received a strong payout in an almost all-cash transaction. More than half a billion dollars came upfront to Frank Hutter, Noah Hollmann, and Sauraj Gambhir.
Prior Labs' Focus and Traction
The three founders started Prior Labs 18 months back. Their work centers on tabular foundation models, or TFMs. These AI systems predict outcomes from table and database data. Such models suit enterprises more than language models in some cases. They align well with SAP's tools for accounting, HR, procurement, and expense management, all database-dependent.
Prior Labs' TabPFN model line gained popularity with developers. Its open-source versions saw over three million downloads, according to a blog post by the founders on the deal.
SAP pledged to keep those open-source models available. The lab will function independently to sustain research speed. SAP offers sustained funding and routes to integrate with products like SAP AI Core, SAP Business Data Cloud, and the agent layer via Joule.
Headquartered in Freiburg, Germany, Prior Labs aims to produce TFMs that pull data from tables. These will mix with language, reasoning, and industry expertise. Founder and CEO Frank Hutter called it a massive boost on X. He said Prior Labs can now become a globally leading frontier AI lab for structured data in Europe and openly.
Earlier, in February 2025, Prior Labs secured $9.3 million in pre-seed funding. Balderton Capital led that round. It topped Neuralk-AI's amount but trailed Fundamental's $255 million Series A from stealth.
Balderton partner James Wise described the sale on X as one of Germany's largest venture exits ever.
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SAP's Broader AI Moves and Agent Controls
SAP, Germany's top-valued firm, acts defensively as agentic AI advances. It barred OpenClaw and unapproved agent technologies, as The Information first reported.
SAP's press team pointed to its API policy for comments. That policy bans AI agents from using SAP products via API unless they follow SAP-endorsed setups.
Approved options include SAP's Joule Agents, now in beta. Customers build their own agents with it. Nvidia revealed in March that Joule works with its Agent Toolkit for agent management. That toolkit underpins NemoClaw, Nvidia's secure alternative to OpenClaw for enterprises. SAP users can thus employ NemoClaw agents.
SAP CFO Dominik Asam spoke to CNBC in January. He stressed speed in adding these technologies to R&D to hold scale advantages.
The company backed generative AI players before. In 2023, it supported Anthropic, OpenAI's rival, plus Aleph Alpha and Cohere. Cohere and Aleph Alpha plan a merger into a global AI force.
SAP built its own SAP-RPT-1, a relational pretrained transformer model. CTO Philipp Herzig stated that SAP spotted early the big chance in enterprise AI lay not in large language models. Instead, it was AI for structured data powering global businesses.
This Prior Labs deal offers SAP a fast path forward.
SAP stock trades slightly higher now. Unlike Salesforce, hit by SaaSpocalypse too, SAP limits agents strictly. Salesforce's Headless 360 lets firms pick agents, even OpenClaw.