Whisk the flour, granulated sugar, baking powder, and salt together in a large bowl until well combined.
Add the egg, milk, and vanilla extract to the dry ingredients, whisking until the batter is smooth and free of large lumps.
Pour the oil into a deep pan and heat it to 375°F (190°C) over medium-high heat.
Transfer the batter into your squeeze bottle or prepare your funnel by plugging the bottom hole with your finger.
Hold the dispenser roughly 3 inches above the hot oil and move in a circular or crisscross motion to create a lacy pattern, using about 1/2 cup of batter per cake.
Fry for 2 to 3 minutes, or until the bottom is deep golden brown, then carefully flip with tongs and cook the other side for another 1 to 2 minutes.
Remove the cake from the oil and let it drain on a wire rack or paper towels for a minute.
Melt the chocolate chips and butter together in the microwave in 20-second intervals, stirring between each, until completely smooth.
Dust the warm funnel cakes generously with powdered sugar and finish by drizzling the melted chocolate over the top.