Ultimately, the VCs probably just ask the founders "Hey, your product looks very similar to product A, how is yours different and did you develop it on your own?" If the founder denies copying and gives a reasonable answer for how they developed it on their own, the VC then makes a judgement. They also may hire some consultants or have some outside experts look at the tech stack to make sure no red flags pop up.
However, you can't dig through every line of code and every document in diligence and compare it to several other companies code/docs. It would take too long and everyone involved (VCs, lawyers, start-up) would be annoyed.
I almost wish you had done my technical diligence, Jacques. I spent a week preparing for it and was very proud of what I’d built.
It's five of us for a week with a super intensive interview on the Wednesday and it is always the highlight of the week for me. What is also neat is that most of these turn into very long term relationships post deal, not necessarily financial ones, just that the interview day makes the whole thing a two-way street where the tech team will occasionally reach out when they are stumped on some problem or need outsider perspective.