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).