For those of you outside of the U.S. or outside of the world of American sports, during “March Madness”, college basketball fans follow the games of 64 teams as they compete in the NCAA Men’s Division Basketball Championship tournament.

In a similar fashion, the savvy startup accelerator TechStars has launched “StartUp Madness,” to feature 64 under-the-radar startups competing bracket style for a grand prize of over $25,000 in goodies like $12,000 in Rackspace hosting credits and a year of SendGrid Platinum, worth $4,799. StartupMadness is separate from the Boulder and NYC applications, currently underway, for the TechStars program. David Cohen, Founder and CEO says it’s purely a marketing campaign to attract and support raw startup talent.

So far, the competition has received over 500 nominations. A nomination is a tweet that says:

“Hey @techstars – I nominate @(company) for @StartupMadness

Of the hundreds of companies, 64 will qualify for StartUp Madness. To make it, TechStars counts the number of nominations, along with a vetting process that ensures each company meets its specified criteria. The nominated companies in Startup Madness will then compete for votes from the public via the user-comparison website This or That. This or That CEO Jon Kelly tell us that they developed technology to build and host tournaments on their site late last year, allowing users to vote on pairs of teams to determine who gets to the next round.

techstars logo 520x372 TechStars to give over $25,000 to winners of its StartUp Madness tournament

In order to qualify, your startup needs to have a live, usable public website or an accessible demo, and you need to have not raised more than $250,000 in investment or revenue in a single year. TechStars companies or alumni aren’t qualified. The deadline to nominate startups is this Wednesday, March 9th.

Starting on March 14th, 64 teams will be in the bracket with 32 head to head matchups. People will then vote on this company or that company at the dedicated website, knocking companies out one by one. The Tournament winner will receive over $25,000 in valuable prizes, including:

$12,000 in Rackspace hosting credits
$5,000 in advertising on Seattle 2.0 web site
1 year of SendGrid Platinum, worth $4,799
1 year supply of Perky Jerky, worth $1,728
1 year of the MogoTest team plan, worth $1,500
1 year of AgileZen unlimited, worth $1,188
Foodzie tasting box 6-month membership, $100

4 Semi-Finalists will receive an invitation to TechStars for a Day, with reimbursement for one person to travel and automatic consideration as a finalist for TechStars. For more details about StartUp Madness, click here.

TechStars is currently running its first New York City program and 8th program overall, which will conclude with a demo event on April 14th, 2011 featuring 11 companies. They’ve added an additional summer program in New York that starts in July, 2011, based on demand. “We have so many mentors that are involved that we can split them in half and have plenty,” says TechStars founder David Cohen. “We’re hoping to build a community in New York. And we expect 7-8 companies to go to raise outside capital after this first program. After a year that will pick up quickly.”

The TechStars program began in Boulder, Colorado but now operates as well in Boston, NYC and Seattle. The program selects 10 companies per city from hundreds of applications each round. These companies receive to $18,000 in seed funding, three months of intensive top-notch mentorship, and the chance to pitch to angel investors and venture capitalists at the end of the program. Notable TechStar graduates include AdStruc, BrightKite, Localytics and UserMojo. For a complete list of TechStars’ alumni in the past, read here.