The deal gives PhotoTLC Inc., a 3-year-old company with 100 employees, the ability to expand its manufacturing facilities and opens the door to working with Disney to create personalized products with Disney characters and companies.

"It's a dream come true," said Ed Bernstein, PhotoTLC's founder and chief executive.

"We already sell our retailers' products with Disney characters. We can put a child's photo on a melamine plate with Winnie the Pooh or Tigger," Bernstein said. "Now we are having discussions about other products we might do with Disney. I can't think of a better combination of investor and strategic partner."

The other investors are JP Morgan's Bay Area Equity Fund in San Francisco, which invests in socially responsible companies, and El Dorado Ventures in Menlo Park, which seeks out entrepreneurs in information technologies.

PhotoTLC has made its mark by working through retail chains to offer professional-quality photo restoration and a full range of personalized photo gifts, including mouse pads, T-shirts, knitted blankets and commemorative plates.

A customer scans his photo at a store's digital photo kiosk. The store sends the scanned copies to PhotoTLC, which processes the order in two days and returns the fully restored photo or gift item to the store for the customer to pick up.

Each day, PhotoTLC processes thousands of orders from 15,000 retail stores across the country, including Walgreens, Rite Aid and Albertsons.

"It's an Amazon.com type of challenge," Bernstein said. "We're the only high-volume mass market provider of photo restoration in the country."

In years past, photo restoration was provided by custom labs, while small manufacturers turned out photo gift items. Generally, the cost was higher and the turnaround time longer than PhotoTLC's.

The company is able to provide high quality at lower prices by developing its own, exclusive technology and software systems, Bernstein said.

Several social trends have fueled PhotoTLC's rise - the widespread use of digital cameras, the growing popularity of genealogy and scrapbooking, and consumers' fascination with personalized items of all kinds.

"We're having a great time. It's a great time to be in this business," Bernstein said.

The company started out in 2002 in Larkspur as a marketing partner for retailers, then moved to Corte Madera and to Novato as business grew.

But outsourcing the manufacturing didn't work well, Bernstein said.

PhotoTLC obtained $5million in venture capital from El Dorado Ventures last year and in May moved to Petaluma to open its first manufacturing facility.

The company chose Petaluma because officers wanted to stay in the Bay Area, and Petaluma could provide the manufacturing space and access to a good labor pool, Bernstein said.

The company occupies 40,000 square feet in the former IDC Building on Cypress Drive. It employs 100 workers year-round, and swells to as many as 400 workers during peak demand seasons such as Christmas, Mother's Day and Father's Day, Bernstein said.

Last month, the company acquired an additional 50,000 square feet of manufacturing space in Austin, Texas.

PhotoTLC will use the new $10million in venture capital to expand its manufacturing capacity and the technology needed to serve its stores and online customers.

"PhotoTLC has rapidly emerged as the leading retail supplier of personalized photo gifts and photo restoration services," said Shanda Bahles, general partner at El Dorado Ventures. "(They) are transforming this industry segment and delivering a significantly higher-quality service."