Oh, absolutely. A lot of VC firms are quite bad at due diligence. However, if you believe John Carreyrou, the big investors mostly weren't thinking along those lines, and some attempts to get investment from real VCs were stymied by the most basic due diligence (one pulled out when Theranos was unable to produce audited accounts, for instance).

Notably, one early investor said, in interviews, that he was comfortable investing because Holmes' grandfather was a businessman, and another relative was a famous doctor (presumably the theory was that she was thus _genetically_ good at medical tech businesses?!). These were, by and large, very much the opposite of sophisticated investors.