From your initial post here - I see 2 areas of concern (one legal, one operational).
Legal - since you say the amount each investor wants to invest, I assume that some (if not all) would be classified as "non-accredited". SEC regulations limit how many can invest in your business. (your state may also place restrictions)
Forming a group (separate entity) for the purpose of investing in your business would not avoid this limit.
Operational - If you have a bunch of investors, you should plan to communicate with them on a regular basis (at least quarterly). Some may feel the need to have more than a quarterly update- which may take up a huge chunk of your time.
If you are going to sell equity to a number of investors, especially ones that are non-accredited, I strongly recommend that you have the proper documentation. That will help you avoid problems later.
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