Fill a large skillet halfway with vegetable oil and heat the oil to 375 F. While the oil is heating up, prepare the funnel cake batter.
In a medium bowl whisk together the pancake mix, sugar, and vanilla extract until combined.
Whisk in the water a few tablespoons at a time until the batter is smooth. The batter should be a similar thickness to cake batter. (If it still seems too thick after adding ½ cup water, add in additional water, 1 tablespoon at a time, until it reaches the desired consistency.)
Transfer the batter to a squeeze bottle or a pastry bag with a ¼-inch wide tip.
Once the oil has reached 375 F, squeeze the batter out into the oil, swirling it in a circular pattern until a disk forms.
Fry the batter for about 1 to 2 minutes until it is golden brown, then flip to the other side and continue frying for another 1 to 2 minutes. Remove to a paper towel-lined plate using a large slotted spoon or spatula and repeat the frying process with any remaining batter.
Sprinkle the funnel cakes with powdered sugar and serve immediately.