The entrepreneurial landscape in the United States thrives on innovation, with tech startups playing a pivotal role in driving change and economic expansion. This article explores the symbiotic relationship between government grants and technology startups, examining the impact, challenges, and evolution of grant programs in fostering innovation. Beginning with a historical overview, it traces the trajectory of government support, highlighting milestones such as the Small Business Innovation Research (SBIR) program and legislative reforms. Through a comprehensive literature review, it evaluates the multifaceted impact of government grants on startup ecosystems, encompassing economic effects, innovation output, and spillover impacts. Moreover, it delves into the challenges faced by startups, including funding constraints, regulatory complexities, and market entry barriers, emphasizing the need for sector-specific tailoring of grant programs. The article concludes with an evaluation framework that scrutinizes procedural efficacy, outcome metrics, sector-specificity, and long-term sustainability, providing insights into enhancing the effectiveness of government grant initiatives for fostering technological innovation.