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Venture capitalists and technology executives are scrambling to make sense of and account for the potential repercussions of the sudden implosion of Silicon Valley Bank on Friday.

The Federal Deposit Insurance Corporation, or FDIC, said Friday that U.S. federal regulators shut down Silicon Valley Bank, the premier financial institution for Silicon Valley tech startups for the past 40 years. The collapse of SVB represents the biggest banking failure since the 2008 global economic crisis.

Numerous venture investors and technology executives expressed shock to CNBC, some comparing SVB’s debacle to that of Lehman Brothers, which filed for bankruptcy in 2008. Many of the investors and execs requested anonymity as they were discussing matters that might affect their firms and employees.

The general sentiment is that SVB did a poor job communicating to clients when it announced Wednesday that it would be raising $500 million from venture firm General Atlantic while also unloading holdings worth roughly $21 billion at a loss of $1.8 billion. One VC said that SVB announcing that it’s raising money while at the same time essentially saying that everything is “fine” seemed to trigger people’s memories of Lehman Brothers, who they remember acted similarly at the time.

“So, unfortunately, they repeated mistakes in history, and anyone who lived through that period said, ‘Hey, maybe they’re not fine; we were told that last time,'” the VC said.

SVB attempted to quell fears that it was financially unsound as late as Thursday evening.

In one email that SVB sent to a customer, a copy of which CNBC obtained, the bank characterized the rumors about its problems as “buzz about SVB in the markets” and attempted to reassure the customer that it “launched a series of strategic actions to strengthen our financial position, enhance profitability and improve financial flexibility now and in the future.”

“It is business as usual at SVB,” the bank said in the email to startups. It added toward the end of the email, “Moreover, we have a 40 year history navigating bear and bull markets and have developed leading risk mitigation capabilities to ensure our long term financial health.”

Another venture capitalist said that a representative from SVB called their firm on Thursday to assuage their fears but that the firm’s CFO “didn’t feel that it was reassuring, to say the least.”

However, one tech CEO was sympathetic to the bank’s plight, asking, “What message would ever reassure you that your money is safe when other people are telling you that there’s a fraud happening? There’s no message, because it’s not a messaging thing. It’s the prisoner’s dilemma thing … Everybody at that moment now has to try and imagine what everybody else is going to do.”

When asked for comment, a representative from SVB referred CNBC back to the FDIC announcement, adding, “The FDIC will share additional information when it is available.”

‘A Twitter-led bank run’

Several venture capitalists quickly told their portfolio companies to move money out of Silicon Valley Bank to other banks, including Merrill Lynch, First Republic and JP Morgan, so they could pay their employees on time next week.

One AI startup executive said the company’s chief financial officer was quick to handle the situation and it had enough money to pay employees on time. Still, the collapse of SVB left a poor taste in the mouth of the executive, who said the bank’s collapse feels like “unnecessary hysteria.”

“It makes me disappointed in our ecosystem,” the startup CEO said.

Many venture capitalists echoed the startup CEO’s sentiment that the SVB collapse felt like a self-fulfilling prophecy created by unnecessary panic. Some likened it to a “Twitter-led bank run,” as the tech community took to social media to spread information, and, often, panic. One prominent technology CEO told CNBC that numerous startup founders were using Twitter and Meta‘s communication service WhatsApp to send each other rapid-fire updates.

One venture capitalist said it was as if someone screamed “fire in a crowded theater where there is no fire.”

“And then when everyone rushes to the door, they knock over the oil lamp and there is a fire and it burns down the building,” the venture capitalist said. “And then that same person [is] standing outside being like, ‘See, I told you so.'”

‘Everyone is scrambling’

As the panic spread and the FDIC stepped in, companies with funds locked up were reporting problems getting cash out and making payroll.

One startup founder told CNBC that “everyone is scrambling.” He said he has talked to more than 30 other founders, and that both big and small companies are being affected.

The founder added that a CFO from a unicorn startup has tried to move more than $45 million out of SVB to no avail. Another company with 250 employees told the founder that SVB has “all our cash.”

Another founder said her company’s payroll provider moved from SVB to another bank on Thursday, which meant payroll did not run for employees as planned Friday morning. She said she has been over-communicating with employees to alleviate their concerns as much as possible, and she is expecting payroll to hit by the end of the day Friday.

In case it doesn’t, the company is planning to wire employees who need immediate spot coverage the funds directly, according to an internal memo viewed by CNBC.

“A lot of people live down to the dollar in terms of budgeting, and they cannot afford 24-hour delay in their payroll,” the founder said.

Payroll service provider Rippling notified some customers Friday that their payments would be delayed due to the bank’s “unexpected solvency challenges,” CEO Parker Conrad wrote in a tweet. The company accelerated a plan to switch from SVB to JPMorgan Chase but not in time to avoid stalled payments. 

Aaron Rubin, CEO of e-commerce logistics startup ShipHero, said he was forced to manually pay some employees Friday, as his company relies on Rippling for payroll services. 

“We found out this morning that no one got paid,” he said. “We started to manually pay our warehouse employees because we didn’t have time to manually send payments to everyone.” 

Warehouse staffers make up roughly a third of ShipHero’s 600-person headcount, Rubin said. Remaining staffers, which mostly include customer service and tech employees, will get paid next week.

“Our concerns are longer term,” Rubin added. “Could some of our customers have liquidity issues? I don’t think we know those ripple effects yet. Are we going to have issues getting paid from our customers because they’ll have issues?”

On Thursday, Jean Yang, the founder and CEO of monitoring company Akita, attempted to complete an online wire transfer to ensure she could make payroll for her seven-person team, but she found that she couldn’t make that sort of transaction by then. She drove to the SVB location on Sand Hill Road in Menlo Park, a street populated by venture-capital offices. 

There, she asked a teller for a bank transfer and was told the branch couldn’t do it. So she asked for a cashier’s check for $1 million. After 20 or 25 minutes the bank handed it over.

Others in line were taking out their entire balance. “I regret not taking out our entire balance now,” she said.

On Friday, Yang returned to the Silicon Valley Bank branch 15 minutes before it opened to remove the remaining money. A line of about 40 people had formed. Gossip spread among those waiting. One person showed a tweet on their phone suggesting that bank employees had been instructed not to come to work. (Reuters reported on a company memo to this effect.)

Then an employee came out of the office and offered about 15 copies of an article from the FDIC on the agency’s response to the bank’s situation. The line disbanded as people realized the bank’s fate.

Later on Friday one of the startup’s investors called Yang and offered to help Akita make payroll, she said. “My hope is that the government bails out people past $250,000,” she said. “I know people with tens of millions, hundreds of millions [of dollars] with SVB. I think if they only get $250,000, their companies are going to be wiped out.”

“Now, everyone’s waiting to see when the Treasury will step in,” said another venture investor. “Hopefully [California Gov.] Gavin Newsom is calling Biden right now and saying, ‘This is systemic in our area, but you can see the ripple effects on other banks and their equities and their bonds.’ If it’s systemic, I think the Treasury will step in like 2007 and ’08 and protect the money market accounts, plus will protect the depositor.”

This person added, “If they don’t step in, then people will presume that money’s lost. That’s going to have huge ramifications on the business environment.”

Watch: CEOs react to the closure of Silicon Valley Bank