This paper investigates how the intensity of competitive grant funding in public research labs affects the type of knowledge produced. The empirical analysis is conducted on 349 French research labs observed over 2011-2015. To assess the type of knowledge produced by labs, we look at the lab publications' distance from the technological frontier: the closer a publication to the technological frontier, the more applied its knowledge content. To measure grant funding intensity within labs, we calculate the number of national and European grants per researcher. We also identify grants in partnership with private companies. We find that a higher intensity of national grants within the lab is associated with fewer publications close to the technological frontier, while European grant intensity has the opposite effect. We also find that companies being partners in the grant increase the share of lab publications at the technological frontier.