Purpose — The purpose of the paper is to explore the question of alignment between knowledge strategy and business model. These two elements are considered as a central parts of organizational strategy at early stages of start-up development. The empirical investigation of the alignment of business model and knowledge strategy is the main long-term objective of this study. However in this paper we concentrate on theoretical foundations of the alignment between knowledge strategy and business model. Design/methodology — This study uses ground theory as a general approach. As the context of the study we choose Russian IT satart-ups. This choice of this setting is driven both by specificity of the setting that makes it easier to indicate particular practice or instrument. Originality/value – There are several things by which our research adds value for management theory. First, we integrate two important domains of strategy research, which is crucially important for the development of the field. Second, we clarify the concept of knowledge strategy and its’ formulation. Next, we explain the process of business model development in very specific settings. Finally, main theoretical concepts are considered at the startup stage. Practical implications – The perspective discussed in this work also has important managerial implications, as it represents a bridge between academic research and managerial practice. The reason for this is the topic itself, which has high priority in managerial and entrepreneurial practice. Moreover, qualitative method used depicts real managerial practice rather then purely theoretical constructs. We also provide directions for the start-uppers on the issue of the development of knowledge strategy and business model. Moreover, we explain the importance of the alignment between these two issues. Finally, we give directions on how it should be done.