There could be many reasons we're seeing a rise in the number of incubators, principally the cost of technology startups are falling (makes sense from a diversification standpoint to invest the same $$$ in 10 companies that you would in one) and as a investor/mentor you stand to reduce your capital risk if you have some say in the early stages of product development.

Investing in early stage is cheaper and riskier. Investing in later stages (when a company has traction/growth - VC/PE stages) becomes more expensive, but is less riskier. The incubator model has the advantage of managing some of that early stage risk that angel investors traditionally didn't control by having experienced entrepreneurs on-board/within a network and in a collegial environment.

Any successful model will attract competitors, so you now have more incubators. He's equating the rise in incubators as a sign of a bubble. It would only be a bubble if you had tons of incubators sitting on cash and not finding any place to invest it. His second mistake is equating failed incubators, that result from poor investment decisions/leadership, with some kind of market correction ("the bubble bursts").