Let's use your example. I can buy a small reusable toy rocket at a hobby store. It will fly up a few hundred feet and come down by parachute in one piece. I can build a somewhat bigger one from pieces as well, there's college competitions around such things. That provides about 0.0001% of the work, skills, etc. needed to build one that can reach orbit and carry an actual payload. In other words, there is basically no relation between the small scale prototype and the actual useful product. A million is also a uselessly small amount of money for such a thing. SpaceX probably went through at least $200 million before it's first Falcon 1 flight.

edit: Btw, parachute approach doesn't scale but it works in a small scale prototype. So you gain little knowledge of full scale re-usability from such prototype. However, you've said minimal bureaucracy so no system for doing such in-depth due diligence.

Now define a system that will verify that the technology is proprietary and not just assembled off the shelf components. Keep in mind that you can also have a breakthrough system that is made of existing components. And do it with minimal bureaucracy. Keep in mind that the person applying may honestly believe they have a breakthrough technology made from existing parts even if it's not.

If it’s outlandish enough anyway, everybody will know there’s nothing like it.

Take re usable rockets. In 2005 everyone agreed it was an outlandish idea that didn’t exist. And yes, obviously you have to glue stuff in a prototype.