OK guys, workaround confirmed. In Parallels 15 or 16 (Tech Preview), just check the "Enable Nested virtualization" option under advanced in "CPU & Memory" section and the VMs will correctly boot and upgrade to 20175 and 20180. Tested on a MacBook Pro (mid-2012) running macOS Catalina and a MacBook Air (2019) running macOS Big Sur beta 3.
As far as I have tested, the option has to remain checked (e.g. ON), because as soon as it's unchecked, the VM won't boot.
Have reported the issue to parallels.
If you try it, please post if it worked for you.