That depends on the details of the "collapse". If they outright went bankrupt then yeah we'd be looking at their equity stakes getting auctioned off by a bankruptcy court. If it was possible for all their investors to pull their money from the fund then they'd have to sell those stakes, or at least sell something, at market rate within perhaps a handful of days, which might be even worse. More likely there are restrictive terms on when people can withdraw from those funds and how much, which ought to limit the possibility of a quick death spiral; more likely you'll see big investors negotiating special terms, and a "lost decade" style stagnation (at least on paper) rather than a plummet.

In theory there's no effect on the company until they come to raise more money. (I mean, their stocks are worth less, and that might make it harder to retain talent if their stock options are now worthless, but that's industry-wide at this point). Companies who have enough to make it to IPO are basically fine (although it's also not a great time to IPO). But raising money privately on a "down round" is very difficult (although again, if it's an industry-wide downturn that might change things) and commonly you see companies in that situation using tricks to juice their valuation (e.g. offering a high liquidation preference to the new investor so that their headline valuation stays high).