It’s lime a mutual funds but if you are going to do this with your friends, better not to because conflicts might happen especially if someones wants to get his money back instantly.
Collecting of funds and investing it is already happening with the stock market and it is being handle by the professionals so you can have more confidence with your funds. It may look higher since the capital is big, but with the trust issues, I think I will not go for this.
Many people are saying about trust issues but I think I read somewhere in OP where they said that a written agreement should be done and legalised. If such agreement exists, there won't be ground for misunderstanding.
Crowd funding and group investment is a key, I will like to try this with my friends but I don't know how they will feel about it. There is power in joint efforts. I have seen people do that in Real Estate and it worked perfectly well.
Even if there's an agreement, there's still a risk of losing your trust.
If you can invest on your own much better, but if you really trust your close friend and you believe on his knowledge about trading and investing, then why not maybe you can just invest small portion of your extra profit so you will not miss the fun with your friends. Personally, I prefer to invest on my own privately.