When you invest in startups, a portion of them will fail. Meaning you'll lose some or all of your investment. If you're going after companies with billion-dollar potential, it's simply inevitable.

In fact, many notable venture capitalists, including Fred Wilson of Union Square Ventures, say that if you don't have some failures, you're not taking enough risk.

He says the failure rate in a good venture capital fund should be around 40% to 42%.

That said, there are certain red flags I've identified (some by learning the hard way) that signal the wrong kind of risk.

So today we're going to look at three warning signs that are specific to early-stage companies.

Red Flag No. 1: Logo Collectors

Big-name partnerships are a great way to make your startup look solid. Even when it's not.

So just because a startup has a deal, partnership, a letter of intent – whatever – with a big-name company, don't take it as a sure sign that things are about to take off.

For example, many consumer goods startups claim their product is “about to be in Target” (TGT) (or Wal-Mart (WMT), Costco (COST), etc.). What they don't say is that it's probably a test run (at best), and the chance of nationwide distribution is tiny. If they do land a deal with a major retailer like Target, keep in mind that the margins will likely be tiny as well.

If a startup's primary proof of traction is a few nice corporate logos in its pitch deck, with little revenue to show for it, I quickly walk in the other direction.

Some startups simply obsess over making deals with established companies. They think it just might be the answer to raising money, making payroll, signing even more deals, etc.

It does make raising money easier for the founders. But that's not a good thing for investors. So unless it's a large stable contract and there are plenty of other customers… WALK AWAY.