Turn on a multi-functional pressure cooker (such as Instant Pot(R)) and select Saute function. Add olive oil when the pot is hot. Add onion; saute, stirring occasionally, until translucent, about 5 minutes. Add 1/2 the butternut squash and the garlic. Saute, stirring occasionally, until squash is browned on all sides, 5 to 10 minutes.
Push squash mixture to the side of the pot. Add rice and stir to coat. Saute, stirring frequently, until starting to stick to the bottom of the pot, 3 to 4 minutes. Pour wine into the pot and bring to a boil while scraping the browned bits off the bottom with a wooden spoon.
Pour vegetable broth, mushrooms, red bell pepper, salt, nutmeg, and the rest of the squash into the pot. Stir; close and lock the lid. Select high pressure according to manufacturer's instructions; set timer for 5 minutes. Allow 10 to 15 minutes for pressure to build.
Cover vent with a towel and twist to release pressure using the quick-release method, about 5 minutes. Unlock and remove the lid. Stir in parsley and top with Parmesan cheese.