Prospect Venture Partners created surprise and unease last week when it decided $150 million was not enough to support a new fund and released its LPs from their commitments. It now remains to be seen if the decision turns out to be the canary in the coal mine warning about the dynamics driving limited partners from the U.S. life sciences sector.

There is no doubt that five years ago a top-tier VC like Prospect wouldn't have gotten hung up on one LP that couldn't commit to a new fund. But the list of issues LPs now face is daunting: illiquidity and the length of time their money is committed in venture funds, along with the fact that there are no longer up rounds that allow them to mark up their investments, while fees and early write-offs create a drag on performance.