The formation of new vascular networks is essential for tissue development and regeneration, in addition to playing a key role in pathological settings such as ischemia and tumour development. Experimental findings in the past two decades have led to the identification of a new mechanism of neovascularisation, known as cluster-based vasculogenesis, during which endothelial progenitor cells (EPCs) mobilised from the bone marrow are capable of bridging distant vascular beds in a variety of hypoxic settings in vivo. This process is characterised by the formation of EPC clusters during its early stages and, while much progress has been made in identifying various mechanisms underlying cluster formation, we are still far from a comprehensive description of such spatio-temporal dynamics. In order to achieve this, we propose a novel mathematical model of the early stages of cluster-based vasculogenesis, comprising of a system of nonlocal partial differential equations including key mechanisms such as endogenous chemotaxis, matrix degradation, cell proliferation and cell-to-cell adhesion. We conduct a linear stability analysis on the system and solve the equations numerically. We then conduct a parametric analysis of the numerical solutions of the onedimensional problem to investigate the role of underlying dynamics on the speed of cluster formation and the size of clusters, measured via appropriate metrics for the cluster width and compactness. We verify the key results of the parametric analysis with simulations of the two-dimensional problem. Our results, which qualitatively compare with data from in vitro experiments, elucidate the complementary role played by endogenous chemotaxis and matrix degradation in the formation of clusters, suggesting chemotaxis is responsible for the cluster topology while matrix degradation is responsible for the speed of cluster formation. Our results also indicate that the nonlocal cell-to-cell adhesion term in our model, even though it initially causes cells to aggregate, is not sufficient to ensure clusters are stable over long time periods. Consequently, new modelling strategies for cell-to-cell adhesion are required to stabilise in silico clusters. We end the paper with a thorough discussion of promising, fruitful future modelling and experimental research perspectives.