It’s not that simple because of the quantity and velocity of the deal flow. In depth due diligence can take weeks and considering how rare these situations are,

It’s not that simple because of the quantity and velocity of the deal flow. In depth due diligence can take weeks and considering how rare these situations are, it’s usually not worth possibly missing a deal. It also depends on getting accurate information in the first place and a private company can hide a lot. There’s also the condition that VCs might have found out and passed but won’t really make much noise about it. They usually don’t have much to gain in calling out “bad” deals and can even hurt them in the future so they stay quiet, for better or worse.