Why would you agree to this before you saw a term sheet, or even how much equity they'll want. What happens if you see the terms and don't agree, after they've selected you or after they've built your product?
It's an interesting idea, but crowdfunding seems to be a better alternative. Even better yet, build a MVP prototype first, validate it, and then get funding.
Also, I am leery of a place that will select based on the input in a single HTML form textbox.
Lastly, the idea is only a small part of success. Execution is a much bigger part of what will make or break a startup. So if they do all the execution, and you provide the idea, they may wind up asking for a 60/40 split in their favor, or even more.
Another thought is that this may be geared to non-tech founders, or founders with little-to-no web engineering experience.