SAP invests $1.16 billion in German AI startup Aleph Alpha

In February, OpenAI's COO acknowledged that AI has not yet deeply integrated into enterprise business processes. However, for SAP, a major enterprise software firm whose stock has declined significantly in 2026 partly due to the "SaaSpocalypse," this challenge remains a top priority.

On Monday, the European tech giant announced plans to acquire German AI startup Prior Labs for an undisclosed sum. Subject to regulatory approval, SAP intends to invest €1 billion (approximately $1.16 billion) over the next four years to develop it into a dedicated AI lab focused on structured data—the tables and databases central to enterprise information systems.

SAP did not reveal the acquisition price, but sources informed Pathfounders it was a substantial exit: an "almost all-cash" transaction, providing the startup's founders—Frank Hutter, Noah Hollmann, and Sauraj Gambhir—with over half a billion dollars upfront.

The trio founded Prior Labs just 18 months ago, specializing in tabular foundation models (TFMs)—AI models designed to make predictions from data organized in tables and databases. This approach is potentially more suitable for enterprise applications than general language models and aligns well with SAP, whose widely used software for accounting, HR, procurement, and expense management relies heavily on database operations.

Nevertheless, Germany's most valuable company appears to be adopting a defensive stance as the tech industry advances toward agentic AI. While building its own AI lab, SAP has reportedly blocked OpenClaw and other unauthorized agent technologies, as first reported by The Information.

When asked for comment, SAP's press office directed TechCrunch to the company's latest API policy, which states that SAP "prohibits" AI agents from accessing its products via its API unless they use "SAP-endorsed architectures."

Authorized architectures include SAP's own offering, Joule Agents (currently in beta), which allows customers to build custom agents. In March, Nvidia also announced that SAP's Joule supports the Nvidia Agent Toolkit, software for managing AI agents. This toolkit underpins Nvidia's enterprise-ready, security-focused alternative to OpenClaw, called NemoClaw. Consequently, SAP customers will be permitted to use NemoClaw agents.

For an established leader like SAP, AI presents both risks and opportunities. "The key is how swiftly we can integrate these technologies into our R&D portfolio to maintain our scale advantage," CFO Dominik Asam told CNBC in January.

SAP has been proactive in this space. The company has invested in generative AI firms developing large and small language models: in 2023, it backed Anthropic (a rival to OpenAI), as well as Aleph Alpha and Cohere, which now plan to merge into a "global AI powerhouse."

SAP also developed SAP-RPT-1, a relational pretrained transformer model. "SAP recognized early that the most significant untapped potential in enterprise AI lies not in large language models, but in AI built for the structured data that powers global business," stated SAP CTO Philipp Herzig.

The acquisition of Prior Labs marks a major step forward in this direction. The startup's TabPFN model series has gained considerable traction among developers. In a blog post about the deal, the founders noted their open-source models have been downloaded more than three million times.

In a press release, SAP committed that Prior Labs will continue to support its open-source versions: "The lab will operate independently to ensure research agility, while SAP provides long-term investment and a direct path to product integration across the SAP portfolio, including SAP AI Core, SAP Business Data Cloud, and the agentic layer with Joule."

SAP and the Freiburg-based startup aim to develop TFMs capable of directly processing data within tables, combining it with language understanding, reasoning, and domain expertise.

Furthermore, they aspire for Prior Labs, with this "massive boost" from SAP, to become a "globally leading frontier AI lab for structured data—based in Europe and operating openly," as founder and CEO Frank Hutter expressed in a post on X.

In February 2025, the startup had previously secured approximately $9.3 million in a pre-seed funding round led by Balderton Capital—more than competitor Neuralk-AI but less than Fundamental, which emerged from stealth with a $255 million Series A in February.

In an X post, Balderton partner James Wise described Prior Labs' acquisition as "one of Germany's largest venture outcomes to date." Meanwhile, SAP's stock is currently trading slightly higher.

In contrast to its stricter approach, SAP is tightly controlling which AI agents can operate within its ecosystem. This differs significantly from the strategy of Salesforce, another established player affected by the SaaSpocalypse. Salesforce allows enterprises to select their own agents, including OpenClaw if desired, through its new Headless 360 architecture.