This is correct. The odds that a VC investment fails because the company copied work and gets caught/sued is very low. Thus, there is little incentive to dig through all the weeds to ensure that absolutely no work was copied.

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.