It will go down in the history books about Silicon Valley: the time that its most prominent bank, a bank founded nearly 40 years earlier, inflicted such grievous injury on itself that it it had to be abruptly shut down by the FDIC. And why? Not because the bank was falling apart at the seams. Instead, because it utterly flubbed some important messaging at the very worst time imaginable.

This, friends, is what is called an own goal.

If you’re just catching up, here’s what happened: Silicon Valley Bank lost $1.8 billion in the sale of U.S. treasuries and mortgage-backed securities that it had invested in, owing to rising interest rates. It owned bonds, for example, that are no longer attractive compared with more newly issued bonds, and took a financial hit on these. The bank was also contending with shrinking customer deposits, given that its customer base of largely startups has far less money right now to park at a financial institution.

Because of its predicament, it decided to raise a bunch of money to safeguard its business. The plan was to sell $1.25 billion of its common stock to investors, $500 million in convertible preferred shares, and $500 million of its common stock in a separate transaction to the private equity firm General Atlantic. The apparent goal was to project that the bank was being conservative and raising this money to stabilize itself.

Oh, though, how it backfired, and who can be surprised, given it issued its announcement about these plans on Wednesday, just as the crypto bank Silvergate was announcing that it was winding down operations.

You might imagine that someone at Silicon Valley Bank would have paused to think: “Hmm, maybe today is not the right time to declare that we’re shoring up our balance sheet.” Evidently, they did not. Instead at the end of the market close Wednesday, they put out a convoluted press release that was received so badly that it was almost comical. Except that Silicon Valley Bank has long been a trusted financial partner to many startups and venture firms that began nervously scrambling to figure out what to do.

It was certainly not funny to Silicon Valley Bank’s estimated 6,500 employees or to its CEO Greg Becker, who found himself having to jump on a Zoom call late yesterday morning to assuage panicked customers that it was just a little news release!

It was not an assuring performance. “My ask is just to stay calm, because that’s what’s important,” Becker said to an untold number of viewers who were not given the opportunity to ask questions. Silicon Valley Bank has been a “longtime supporter of you, the venture capital community companies, and so the last thing we need you to do is panic,” he added, saying what no one ever wants to hear from the head of their bank.

One of those customers, who asked not to be named, said to us afterward: “It’s like the end of ‘Animal House.’ Don’t panic? Now, I am panicking, watching your broadcast.”

Indeed, a sense of unease immediately gave way to full-blown panic that became too widespread to be stopped, as firms including Founders Fund, Coatue and Y Combinator advised founders to get back their startups’ capital while they still could.

By this morning, a widely expected “white knight” that was expected to materialize, scoring the deal of a lifetime and keeping Silicon Valley Bank’s employees from running for the exits, did not. Apparently, Silicon Valley Bank had lost so much value so quickly that none of the suitors who turned up at its headquarters yesterday could agree on terms of a deal.

As for that General Atlantic investment, that fell apart, too. (The company never returned our requests for more information yesterday, but it agreed to invest $500 million in Silicon Valley Bank’s common shares in a deal that was contingent on the public buying $1.25 billion in common stock, which very obviously did not happen.)

Yesterday, we’d reached out to Silicon Valley Bank, which reiterated Becker’s earlier talking points. Silicon Valley Bank was/is just trying to “strengthen its financial position.” It is “well-capitalized,” has a “high-quality, liquid balance sheet,” boasts “peer-leading capital ratios,” etc., etc.

Now, the same employees who responded to our inquiries are in a terrible spot, along with their many colleagues. Of course, it’s also a very dark day for Becker, who should have done more to diversify the bank’s business (this has been an issue hiding in plain sight for years) and instead gave traders and hedge funds a new way to trade on the current decline of the startup economy.

While Becker will be fine, humiliation notwithstanding — he sold a massive chunk of his own shares very recently — the impact to bank insiders is merely the tip of the iceberg.

The bigger question right now is what happens to the bank’s many clients, many of them startups that were not able to get their money out in time and are now letting employees know that they can’t pay them until more of the bank’s assets can be liquidated, which could take weeks if not longer.

If their venture backers are offering then bridge loans in the interim, they are doing it very, very quietly. None one of the firms who we have asked about this have said it’s happening.

In the meantime, Rippling, an HR software company, is among the many startups caught in the downdraft.

As founder and CEO Parker Conrad announced on Twitter today, Rippling now won’t be able to fulfill scheduled payments to its customers because of “pay runs initiated early this week, with funds in-flight through SVB.” The outfit’s “full focus is on getting these employees paid as quickly as possible,” he added.

Conrad said Rippling is moving its business to JPMorgan Chase, but other, younger banks are busily trying to persuade startups that they are also safe havens for their capital.

Not everyone is buying it.  Jeff Richards, a venture capitalist at GGV Capital, wrote on Twitter that he’s “surprised by the ‘move your cash from a bank to a startup fintech’ posts but I guess we’re in a financial Darwinism phase.”

He added in a later thread, “I personally would not recommend having corporate cash with a non-public co. Will leave it at that,” to which one investor said, “prudent.”

[Author’s note: This story has been updated since its original publication yesterday to reflect newer developments.]