When you get a grant you're subject to many rules. You usually have to submit a budget and money will only get disbursed in accordance with that plan. And there may be many limitations as to what the budget can contain in the first place. Say only X percent can go towards Y class of spending.
Your startup is doing poorly and you want to downsize? Well you can't because you budgeted for X people. Want to cut or increase salaries? You can't. I mean you could fire these people but you'd be forfeiting the funds. So people don't.
Then there's pressure. [Private] VC is an honor system. There are very few legal obligations but you're expected to perform. Your continued access to funds will mostly depend on how you're perceived by the VCs.
With grants you only need to follow legal requirements. No pressure to perform. The agencies only care about you following the rules. When applying for more money, again, you need to fulfill a bunch of requirements. There's not much of a reputation system. If you get denied but meet all the formal requirements you can often sue and win.
And since there's no dilution there's no limit to how many different grants you can take.
Potato potato. Most "startups" in the US are nothing but VC money chasers and often lose billions of infinite investor money (looking at you, Uber) for indefinite periods of time. How is this different from grants other than it's "free" government money in one case and "free" VC money in the other?