I think you are being overly harsh. Having $10,000 in free money to spend doesn't seem like such a bad problem to have. It's not clear they are wasting time or money,
If the grant was easy to apply for, I don't fault them for not having a plan of how to spend the money they didn't yet have. (I do fault the grant granting people though. Shouldn't "what are you gonna do with it?" be a major factor in picking the grant recipients?)
EDIT: forgot to add: to the OP, I'll Nth the concept of spending a big chunk of it on customer acquisition or field testing your MVP. Buy traffic you can convert to paying customers (or failing that, names and addresses of interested customers).
If the grant was easy to apply for, I don't fault them for not having a plan of how to spend the money they didn't yet have. (I do fault the grant granting people though. Shouldn't "what are you gonna do with it?" be a major factor in picking the grant recipients?)
EDIT: forgot to add: to the OP, I'll Nth the concept of spending a big chunk of it on customer acquisition or field testing your MVP. Buy traffic you can convert to paying customers (or failing that, names and addresses of interested customers).