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Cities

Airbnb Fuels Boutique Rental Startups, but Regulatory Risks Loom

A new breed of vacation rental startup offering upscale apartments to tourists is attracting interest from venture capital firms. But some investors are staying away, worried that tight regulations in some of North America’s hottest real estate markets will limit the startups’ growth.

Two early entrants in the market, Sonder and Parallel Travel, have raised significant venture capital around the concept of branded, design-driven rentals, including previously undisclosed rounds. Yet four other investors pitched by the companies told The Information they weren’t interested in funding them, in part because of regulatory constraints in places like San Francisco and New York designed to preserve housing for permanent residents.

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