Competition exists in all walks of life. Ibeatyou capitalizes on that idea with a site that allows users to set up competitions across a wide range of fields, everything from dancing to comedy to music to yes, sports (checkout our full coverage here).

As an example, basketball star Steve Nash posted a video challenging users to see who could hit the most free-throws in a minute. Users watch the competiting videos and judge each on a scale of one to five. The video with the highest average score when the competition ends is the winner.

Now the site will find itself in a competition of its own. The Ibeatyou logo will be placed on the Luczo-Dragon Racing car during this year’s Indy 500. Steve Luczo, the chairman of hard drive manufacturer, Seagate, and an Ibeatyou investor, is the owner of the car. The car finished 5th in last year’s Indy 500 and looks to continue that success given the competitivness of Ibeatyou.

As part of the marketing relationship, Ibeatyou will also set up a competition between the Luczo-Dragon Racing car and other prominent drive around the time of the Indy 500 event. The actual race will take place on May 25.

Ibeatyou isn’t stopping there. The site has also announced a partnership with the popular social network application Watercooler. Watercooler brings together fans of popular television series and various sports to interact on sites such as Facebook, MySpace and Bebo. The over 20 million people who use the Watercooler application will now have a chance to compete against one another via Ibeatyou competitions.

Given the built-in relationships inherent in social networks, those networks seem like a natural breeding group for web-based competitions.

Ibeatyou faces some competition in its business model from Strutta, another online site which asks users to vote on their favorite videos in different competitive categories.

Ibeatyou raised angel funding from Prism VentureWorks and two former partners at Crosslink Capital. Angel investors also include Baron Davis, a star on the Oakland-based Golden State Warriors professional basketball team as well as retired professional football star Ronnie Lott’s investing arm, Champion Ventures.