I really enjoy this game and have seen that the battle system is fairly easy so far, until I came to the fight at the end of fungus grove. I don't like to make unnecessary posts, but after I had failed the fight with 2 lvl 17 pets, and still came absolutely nowhere close, I am beginning to think that it is impossible. if I just need to keep grinding to become stronger, please let me know what level, and if there is another way to beat this fight, please let me know.

I can see why you are having problems.
First off you have no gear on your pets.

Secondly your second pet is not attuned to anything so it cannot contribute appreciably.
I would suggest doing some missions to get more gold, exp. ,etc then try to get some better gear.

Attuning your second pet to light would help some as it can heal your other pet/s during battle also while Earth is good, I personally like Water,because when "Frost" is granted, it can absorb damage.
Shadow for a tank is good too because if 'Siphoned" is granted, it can weaken your opponent and heal the tank too.

I would think that you should have come across some gear as you battled and even if it is cruddy at first, it is better than having nothing.

Gear will increase the statistics of your pets so equipping is needed or else they'll just get pounded.

This needs to be moved to Q&A