Biotech/medical venture capital is a completely different and only slightly smaller industry than software VC but yes the top late stage firms, like Sequoia Capital, generally invest in both. It's hard to find companies to invest tens or hundreds of millions of dollars into (each) and biotech companies can easily require that much in an industry with proven exit strategies (and greater annualized returns than software according to some studies). Since pharma largely outsources R&D to the startup world, there are many exit paths including technology or talent acquisition (people, techniques, and equipment), patent acquisition (before and after approval), and even pre-revenue IPOs which are surprisingly common in the life sciences to this day.

This is just not true. When a VC invests, they are betting this company will aggressively grow in value. All do some amount of due diligence. Clearly in some cases, not enough.