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Choose PE/VC for more opportunities and growth as a commercial lawyer.
Choose Funds if you want to be hyper-specialised in a small area of the law that mostly all funds will outsource to law firms on a one-time mandate (making it harder to move in-house later).
The other downside of fund formation work is the lack of exit oppurtunities. PE / M&A has much better exit opppurtunities outside of law firm - in fact, I'm not sure how fund formation lawyers get an exit from law firms other than the very very few in-house oppurtunities where those skills are required.
First - Completely agree with Featured Guest below on what Funds practice is and and what PE/VC practice is.
Second - to answer your specific question on what working hours and style is like. Fund formation is a more advisory driven / stable practice. Late nights are less common compared to PE/VC practice - since the work is: (a) more standardised in many ways, (b) not urgency driven most of the time, and (c) not negotiation / counter party driven since fund formation work is rarely (except in case of LP-GP negotiations) something that happens with a third party i.e. you do the work for the client, you get comments from the client, you update the client and the final work product is signed off by the client.
One minor exception to the above is where you have to make regulatory filings / submissions - like filing an application with SEBI. Again, that work is largely standardised and rarely heart racing - and SEBI takes its time with most things (and from what I hear is taking more and more time).
On the other hand, PE/VC is transactional work and work hours are always up in the air. It's a lot of negotiation, due diligence type of work which means you could be working all the time and forever.
Another thing to note is that fund practice is tax adjacent. Meaning, you need to have some understanding of tax laws since funds are setup to mitigate tax risks. Again, the learning on this is standardised for the most part, but there will be structuring work (i.e. how funds are set up, which entity in which jurisdictions etc.) that is also substantially tax driven so you will need to have a working knowledge of a lot of these things. If you don't love tax then this will become a problem quickly.
Last, my personal note as someone who worked in the funds practice and then became a transaction lawyer (M&A / PE-VC) is that funds practice is great for a stable life and if I had been smarter I would have tried to build my career in a Tier 1 practice (like KCO for example - Siddharth Shah is awesome). WIth that said, I was young and wanted to do "exciting" work and transitioned to PE/VC work which I was actually better at (thankfully). This work is more exciting and in my opinion more "satisfying" (to me) - but the life is way worse.
Ultimately you'll figure it out as you go long and but know this. There is way less competition to be an amazing funds lawyer (since it is supposedly less glamarous) then to be a PE/VC lawyer, and depending on what you want in life you'll make the choice that makes sense to you.
To answer your next question, funds practice is very different from PE/VC. PE / VC practice deals with transaction when a fund enters (or exits) into an investment in an investee company whereas the funds team deal with formation of PE/VC funds.
Good firms that have Funds practice:
KCO (Siddharth Shah), Trilegal (Ganesh Rao), ICUL (Tejesh), CAM, SAM, NDA, Resolut.
In addition, what kind of working hours is there? Is it even worse than cap market working hours?